Ray Grabanski, Progressive Ag
Wheat Technical indicators are showing a possible bottom in the wheat complex. It doesn't happen very often in grains where we have a spike bottom (May 13 price action with a new low followed by a higher close). But these markets have been counterseasonal so far (lows in the spring during planting) so the bottom could be in. Generally, grain markets languish at lows for months at a time.
Wheat Spring wheat is 22% planted compared to 49% for the five-year average. Trade was expecting 25-26%. Spring wheat emergence is 4% compared to 19% for the five-year average.
Wheat The Kansas wheat tour concluded with a final estimate of 47.2 bushels per acre. This was more than 10 bushels per acre above last year's estimate and well above the five-year average of 40.2 bushels per acre. This would equate to the Kansas crop reaching 306 million bushels, 62 million more than 2018.
Wheat Stats Canada gave the market another drubbing this week on higher than expected spring wheat planting intentions. May Minneapolis hit a contract low of $5 in April 24 trade.
Wheat Wheat markets were under heavy pressure this week on Russian production estimate increases and favorable rainfall forecasts for the southern Winter Wheat Belt.
Wheat The U.S. dollar made an attempt at the old high of 97.16 on the June contract, reaching 97.095 before backing off to 96.525. There is some heavy resistance at the 97.16 to 97.665 (March contract high) levels. There has been strength lately with the Brexit vote and foreign investors fleeing the Euro buying the U.S. dollar. Since March 20, the dollar has gained $1.70 and the euro has lost €2.61 reaching new contract lows.
Wheat Early week strength came from the U.S. coming in as the cheapest bid for an Egyptian tender (before freight costs). The U.S. was $13.74 per metric ton cheaper than France and $16.50 per metric ton cheaper than Russia. Weekly export sales were 475,700 metric tons (17.5 million bushels), which was above trade expectations. Total commitments of 868 million bushels are up 3.5 percent from a year ago compared to the U.S. Department of Agriculture's expectation of a 7.1 percent year-over-year increase.
Wheat The wheat market was supported by lower condition ratings, a weakening U.S. dollar and a U.S.-Brazil trade agreement this week. Kansas crop ratings declined 2 percent to 49 percent good to excellent, and Oklahoma improved 4 percent to 60 percent good to excellent from the week prior. Texas improved 5 percent to 33 percent good to excellent after experiencing an 8 percent decline the week prior. Southeast states in the soft red belt show ratings below the five-year average as they continue to struggle with high moisture.
Wheat The wheat market started the week reaching new contract lows with record net short positions in the Kansas City contract but experienced a bout of short covering on poorer than expected condition ratings.