March 8, 2018

The USDA report took all the air out of the room today, although it was all about corn. The corn market will start to support wheat prices as well which just continues to beg the agreement in the cash markets, where can we sell our wheat at these levels. I/we talked about the balance sheets in yesterday’s report & nothing has changed today. Emily has done some good work on weather & what the forecasts could mean for the HRW crop going forward, but I/we contend we’re losing demand as fast as we are supply today. The bottom-line for this reports is, “without the cash carry the cash basis would collapse if it was based upon demand. USDA cut their exports 25 mbu today & we think they may need to cut another 25 mbu in the April report; don’t forget we normally carry 500 kmt +/- of old crop sales forward into new crop so when people talk about what is needed to meet USDA’s sales forecast, you best add an additional 500k to that number.

US Wheat Associates & others are very concerned about the possible impact on US grain shipments to Asia since the USA has pulled out of the TPP agreement. They are suggesting sales of wheat to Japan could be cut 50% (2.0 mmt) under the TPP 11 rules. Although this could happen & Japan could buy more from Canada, then Canada will have less to sell to someone else & the US will fill that gap. It will result in shuffling the deck chairs around on the ship, Canada sells more to Japan but they have less for LAM or another buyer.



Cash Values