Market Situation
Crop Progress. Winter wheat condition ratings released on Monday made no changes compared to the week before. The crop condition index of 364 is well above the average for this week of the crop year of 326. This week’s report had the first ratings of a 2016 spring wheat crop that is off to a good start: 76% is rated good and excellent, 22% fair, 2% poor, 0% very poor.
CCIThe Texas wheat rating slipped 1 point this week, down to 341. The percent rated fair increased 1% while the good declined 1%. The average crop index score for Texas wheat at this time of year is 284.
The percentage of wheat in Kansas rated as good and excellent went up this week, from 57% on May 15 to 59% May 22.
Important to monitor as we approach harvest is the maturity of the crop impacted by heavy rain. Much of central Texas is ready to harvest and faces lodging and quality issues. Kansas overall only has 16% of the crop coloring, from 0% in the NW to 55% in the SE.
Weather. Heavy rain over the last several days has been concentrated in the eastern half of hard red winter wheat production areas from Texas to Nebraska. Rainfall is forecast to persist over many of these same areas for the next 7 days.
The ENSO update for the Australian Bureau of Meteorology notes the end of El Nino as temperatures in the tropical Pacific Ocean have returned to normal. The update from the Climate Prediction Center this week shows the observed weekly temperature departure was +0.2°C, down from +0.6°C last week, back in the neutral zone.
Commitment of Traders. Futures positions held by Managed Money traders in corn and soybeans were still net long on Tuesday as reported in today’s Commitment of Traders. Both wheat markets were increasingly net short. Long positions in corn increased by over 20,000 contracts but long positions in soybeans declined by about 7,000. For the complex as a whole, positions are still net long by over 100,000 contracts.
The spread between new crop July Kansas City wheat and September is 16 cents today, above full carry for that 60 day period (2 months x 6 cents per bushel/month = 12 cents). Any percentage of carry above 67% is generally considered to be a bearish commercial market indicator.
Marketing Strategies
2016 Wheat Marketing Plan. I am 45% priced on the 2016 wheat crop. Production prospects for the U.S. continue to look positive given better than normal crop condition ratings. Some price support could spillover from a rally in the corn market or production problems overseas.
Upcoming Reports/Events.
June 7 – Grain Grading Workshop, Corpus Christi; Short-term Energy Outlook
June 10 – WASDE
June 24 – Cattle on Feed
June 30 – Acreage; Grain Stocks
