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Wheat harvest. Photo: Kansas State University
Volatility remains the key word when looking at wheat prices, and the Soft White (SW) market is no exception.
Since rising rapidly following the severe drought of 2020/21 and the Russian invasion of Ukraine in March 2022, US wheat futures have recently fallen and fell more than 4% on the 5 July, hitting a multi-month low.
Although SW is not traded on a futures exchange, as soft wheat it mirrors the price of CBOT soft red winter (SRW) futures which settled on July 5 at $8.07, the lowest level lowest since February 18, before the invasion. On July 6, the July contract contracted by SRW slipped further, falling below $8.00/MT.
Source: USW Awards Report. Click on the image to enlarge
New crop arriving
U.S. SRW and Hard Red Winter (HRW) wheat crops are underway, helping to drive down SW and futures prices as the market takes notice of crop condition and potential news. of yield. An additional downside factor is improved growing conditions which is building confidence for this year’s Hard Red Spring (HRS) crop.
Abundant moisture and cooler temperatures this growing season have benefited the Southwest crop, but have also slowed crop progress, causing a slight delay in harvesting this summer.
More SW coming slightly late
A wheat trader shared an anecdote about harvest time from a Washington-based wheat farmer. Each year, the farmer watches when a specific type of flower blooms to indicate when the harvest will begin.
Usually the flowers bloom around mid-June and the wheat usually matures about three weeks later. But this year the flowers only bloomed at the end of June, so the farmer expects to start harvesting around July 15.
This SW new crop forecast also helps explain the rapid rise in SW export prices in May when “old crop” stocks were depleted and in June when the price began to turn to a lower ground. of agreement.
SW price moderation. As the harvest of a much improved and potentially high-yielding US SW wheat crop nears, new crop prices have fallen to a level similar to August 2021 prices. Source: USW. Click on the image to enlarge
SW buyers around the world know all too well the impact of drought and heat on SW production and functional characteristics in 2021, as well as export prices. This year, things are different.
“Much better” manufacturing
The US Drought Monitor keeps statistics comparing changes in drought status from year to year. A recent comparison map (below) shows significant improvement in the Pacific Northwest SW and white club producing region, as well as much of the US HRS and northern durum producing region.
Source: American Drought Observatory. Click on the image to enlarge
In an interview with the Moscow-Pullman Daily News, Glen Squires, managing director of the Washington Grain Commission, pointed to the volatility and the many factors that fueled and then slowed the SW wheat market. The weather, he points out, is a key part of what’s behind the market right now.
“Our wheat production in the Pacific Northwest is expected to be much better this year,” Squires said. “If the estimates are correct, we could be 20 million bushels (544,366 metric tons) above our five-year average. This therefore plays a little on (the volatility of the market). »
Buyers can monitor US Wheat Associates (USW) Harvest reports for weekly updates on harvest progress and initial harvest quality data and follow more news on the 2022 harvest through national wheat boards and updates from USW regional offices.
