THE weekly United States Department of Agriculture (USDA) Crop Progress Report, released on Monday night each week, revealed two major factors impacting wheat prices last week.
The first is that the winter wheat harvest is finally gathering pace, with 17 per cent of the crop in the bin.
While this lags the average pace of 26pc, new supplies are hitting the US market, and peak harvest pressure on the market is just around the corner.
Chicago Board of Trade (CBoT) Soft Red Winter wheat futures have come under harvest pressure, and while the May price lows, and the June lows to date, may hold, harvest is becoming a factor in preventing the market from moving aggressively higher.
The other factor was the condition rating for the US spring wheat crop.
The percentage of the crop rated good to excellent slumped 10 points to just 27pc.
That is a big weekly drop and compares to 75pc of the crop rated good to excellent at this time last year.
That shows just how severe the drought in the Northern Plains of the US is.
Nearly all of the US spring wheat cropping area is fully drought declared.
Of course, the dry conditions do not stop at the border, but extend into Canada as well.
This is supporting US spring wheat futures, with some support flowing over to the global benchmark CBoT wheat contract as well.
One fallout of the US spring wheat issue is the squeeze on high protein wheat supplies.
Protein levels are also low in the US Hard Red Winter wheat harvest to date as well.
It will be interesting to see if that flows over to our own pricing for higher protein wheats.
It also explains why we are seeing gains in canola prices this week, despite US soybeans pulling back on forecasts for rain in the US Midwest.
Canadian canola stocks are tight, and the dry conditions are reducing yield potential from this year's crop.
The recovery in Winnipeg canola futures this week is flowing over to EU Matif rapeseed futures, which in turn is supporting Australian canola prices.
Since the peak in the canola market on June 9, Matif futures fell $102.60 per tonne, bottoming out on Friday last week.
Since then, prices have recovered by $32.06/t to Wednesday this week, driven in part by the seasonal issues in Canada.
We are continuing to see this volatility flow into our own canola market, with forward prices peaking at $788/t on June 9, then falling sharply but recovering to at least be back above $700/t last week.
p For further information contact Malcolm Bartholomaeus on 0411 430 609 or malcolm.bartholomaeus@gmail.com
