Weekly Market Highlights
- Nearby wheat futures prices have lost about 5% to 6% of their value following last Friday’s USDA report, which surprised markets by raising estimates for total wheat production and ending stocks when many expected them to fall.
- While the USDA still estimated hard red winter wheat production down 31% from 2016, hard red spring down 22% and durum down 47%, these levels were thought to have already been assumed. The report was viewed as bearish wheat, and the futures prices dropped.
- Spring wheat basis premiums are firm to higher. Hard red winter wheat basis premium prices have fallen steadily but slowly, as it is thought many bakers have adjusted to this crop’s new normal, and supply and demand are not at odds.
- These levels could present a buying opportunity, as it is likely more wheat has come to market recently than we will be seeing going forward while farmers and elevators try to find storage for the late corn and soybean crops.
- While the large domestic carryover of wheat we had become accustomed to over the past couple of years has fallen, there is still ample wheat in the world, and competitive exporters are expected to keep prices from escalating in a dramatic way.