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Recap of Friday’s Major Data Dump for Wheat

The long wait is over. The major data dump on Friday – two months of supply/demand reports, winter wheat plantings, quarterly stocks, and the annual production summary – basically boiled down to barely a blip on price action.

For wheat, most of the attention was on plantings. All winter wheat seedings came in at 31.29 million acres, down 1.245 million from last year. Hard red winter wheat acres were 22.2 million, down 723,000 from last year; soft red winter was 5.66 million, down 416,000; and white wheat was 3.44 million, down 100,000 from last year.

All were down more than expected, especially soft red winter. And total winter wheat acres will mark the second lowest on record. It is important to keep in mind, too, that many of those acres were planted late into wet conditions, so yields could be stressed. Time will tell.

The quarterly stocks report showed wheat stocks as of December 1, 2018, at 2.0 billion bushels, 43 million above the estimate and 117 million over December 1, 2017.

Moving on to the supply/demand report, USDA lowered wheat feed usage from the December estimate by 30 million bushels, lowered seed use by 6 million, and raised ending stocks by 36 million to 1.01 billion bushels. On the class breakdown, hard red winter end stocks were raised 23 million to 491 million, which is down 90 million from last year. Soft red winter end stocks were raised 6 million to 163 million, down 42 million from last year; spring wheat end stocks were raised 7 million to 262 million, up 71 million over last year. Durum was left unchanged at 45 million, but up 10 from last year; and white wheat was also unchanged at 49 million bushels, down 38 million from last year.

Wheat Exports

Soft red winter wheat was the focus of bullish activity on Friday with the surprisingly low plantings, but also on a sale of 120 TMT to Egypt. Exporters were more aggressive in this latest tender and it paid off, with the U.S. slipping in as the cheapest offer that also included freight. France was second in line with 120 TMT as well, and Ukraine rounded out the sale with 60 TMT. Russia had offers but were well above the sales prices.

Export sales as of December 27 were reported on Thursday. Wheat sales were another strong 593 TMT. Hard red winter made up 52% of the sale at 308 TMT, spring wheat was 23% at 135 TMT, and white wheat made up 21% of the sale at 124 TMT. This was the second export sales report since the government reopened, and both were well above the previous average.

Clearly, more business is flowing to the U.S. Basis levels at export locations were sharply higher for hard red winter wheat, up a whopping 60¢ in just one week. It could be a short-term supply squeeze or an indicator of something bigger happening. Either way, there appears to be a great deal of activity in the cash market. Next week we’ll get one more delayed export sales report, and then on Friday, February 22, we will get all caught up. Another data dump if you will.

Chicago/Kansas City futures spreads widened out on the bullish soft red data this week. But if the surging hard red basis holds its gains, it would seem that Kansas City ultimately would find more enthusiastic buying as well. With Russia mostly out of the export picture, we can expect to see more business come to the U.S.

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