Grain markets had plenty of action this week as a variety of fundamentals stayed at the forefront. Weather was a concern again this week both here in the US and abroad; tightening food supplies; the near saturation of media attention to food and grains; the steadily evolving situation in Egypt; and of course the supply/demand report that goosed prices mid-week.

Where to start. Well, weather continues to grab traders’ attention even though the crop is dormant in the areas with extreme conditions. Nevertheless, the US western plains still have little or no snow cover and they experienced their second major cold snap in as many weeks. Record lows in Oklahoma, a mind-boggling -31F could certainly do damage to wheat that was already stressed. Next week, temps are expected to quickly warm up, which could create more stress. While the northern plains got another shot of cold, they have more than adequate snow cover. They have so much snow that there is already talk of spring floods and delayed plantings. A bit early for that kind of worry, but it’s out there.

China wants to keep repeating their drought woes in key winter wheat regions even though they, too, are still in the dormancy phase and wheat was in good condition before winter set in. They did get some snow over the week across the dry area, and China did finally acknowledge that it is usually dry this time of year anyway, and with 80% of the wheat irrigated chances are still high they will have a good crop.

Speaking of good crops, India issued their latest wheat production estimate at 81.4 MMT, .7 MMT higher than USDA. If realized, it would be India’s 5th record crop in a row! The question is where will they put it? In their stocks report also released this week, India estimated current wheat stocks at 19.4 MMT, significantly higher than their target of 8.2 MMT. Rice had a similar report, with current stocks at 27.8 MMT, compared to their target of 11.8 MMT. They do appear to be competitive in the export market at least to their neighbors as they managed to sell some cargos of both wheat and rice to Bangladesh.

USDA issued their supply/demand report on Wednesday. The trade was looking for bullish numbers and they got more than they expected with corn. An increase in ethanol use took corn ending stocks down to 675 million bushels, and stocks to use ratio down to 5.0%, the lowest ratio since ‘95/96. Corn prices shot higher and pulled wheat and soybeans higher as well, even though the stats for both of those crops were virtually unchanged. It would seem to me that as long as corn stays strong, it will certainly add major support to wheat as well, particularly considering the large quantities of feed wheat available.