Wheat holds double bottom
Wheat markets continued to try to fend off the pressure from corn and beans, managing to hold the early July lows while the row crops dropped to new lows for the summer. Fundamentals are improving for wheat, but the bearish attitude for corn is still holding the wheat bulls in check.
Harvest pressure is over for the winter wheats and both Kansas City and Chicago appear to be establishing double-bottom formations. Unfortunately, we can’t say the same for Minneapolis, which put in new lows again this week. It did manage to bounce late in the week along with the winter wheat markets, but it has yet to see the harvest pressure begin.
As harvest progresses through the Northern Hemisphere, we see the fine-tuning adjustments being made. Russia appears to be lowering its wheat production estimates while Ukraine and Kazakhstan increased theirs this week. Russia’s Ag Minister pegged wheat yields at 3.07 tons/hectare, up .6 from last year, for a total production estimate of 48 MMT, down slightly from their last projection and 6 MMT less than USDA’s last estimate. Ukraine increased its wheat estimate about 3 MMT and Kazakhstan lifted theirs 1.3 MMT to 16 MMT, up 7 over last year and 1.5 above USDA.
The EU saw its wheat estimates increased 3 MMT to 131.7 MMT. This week, Lanworth estimated total world wheat production at 694 MMT, 4 less than USDA’s July estimate.
However, most of the Northern Hemisphere is ratcheting downward its production of quality wheat. We’ve already seen estimates from China of about 20 MMT of sprout damage to their wheat. Europe is also lowering quality estimates in the key countries of France and Germany.
This week we also saw frost damage hit southern Brazil production, prompting another estimated 400 TMT purchase from the U.S. for hard red winter. Brazil has been an unusual presence in the U.S. market since early in the calendar year. While normally one of the world’s largest wheat importers, they rarely get on the radar since most of their imports typically come from Argentina.