Pressured by a bearish WASDE report and a stronger U.S. dollar, U.S. wheat futures ended the week mixed.
Rain falling on ripening wheat around the world created concern about winter wheat quality and limited CBOT and KCBT losses. CBOT July wheat slipped 2 cents to $4.95/bu, KCBT dropped 5 cents to $4.68/bu and MGEX added 14 cents week-over-week to $5.54/bu. CBOT July corn climbed 5 cents to $4.23/bu and CBOT July soybeans jumped 46 cents to $11.78/bu. CBOT soybeans have climbed for nine straight weeks, the longest such streak since 1973. Since April 8, CBOT soybeans have rallied $2.60/bu.
* Seasonal harvest pressure pushed basis lower this week for Gulf SRW and HRW. Protein premiums for HRW widened this week on the expectation of a high-yielding, lower protein HRW crop. White wheat protein premiums have eroded due to pressure from a more normal production year with adequate moisture. Basis levels for the Pacific Northwest are firmer for the last quarter of 2016 due to planned maintenance closures on the Columbia-Snake River system. Fourth quarter basis for the Gulf is also firmer due to increased competition for elevation capacity from corn and soybeans.
* In its weekly Export Sales Report, USDA reported net sales of 223,800 metric tons (MT) for the 2016/17 marketing year, which began June 1. A total of 1.30 MMT in sales were carried over from the 2015/16 marketing year, which ended May 31. Sales were below trade expectations of 300,000 to 500,000 MT. Total known outstanding sales and accumulated exports of all classes of wheat for the 2016/17 marketing year, through June 2, 2016 were 5.76 million metric tons (MMT), 22 percent higher than last year's year-to-date total of 4.73 MMT. USDA expects 2016/17 U.S. wheat exports to reach 24.5 MMT.
* As of June 6, 91% of U.S. winter wheat had headed according to USDA, which rated 62% of the U.S. winter wheat crop as good to excellent, down one percentage point from the prior week. USDA rated just 8% of the crop as poor or very poor, unchanged from the prior week. USDA reported spring wheat emergence at 96% complete compared to the 5-year average of 78%. USDA rated 79% of the spring wheat crop in good to excellent condition, on par with wheat conditions at the same time last year.
* USDA forecast world wheat production at 731 MMT, up from its May estimate of 727 MMT, but slightly below last year’s record production of 734 MMT. Global trade will slip to 166 MMT, down from an estimated 167 MMT in 2015/16. Global consumption will set a new record for the fourth consecutive year at 716 MMT. U.S. production is expected to reach an estimated 56.5 MMT, pushing U.S. supplies up 9% due to beginning
stocks climbing to 26.7 MMT, up 30% year over year and the largest beginning stocks since 1988/89, if realized. USDA believes U.S. exports will rebound to an estimated 24.5 MMT, up 16% from 2015/16.
