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Price action: July SRW wheat futures rose 7 3/4 cents to $6.35 and nearer the session low. For the week, July SRW lost 25 1/4 cents. July HRW rose 35 1/2 cents to $8.77, hitting a 5.5-month high and closing near mid-range. For the week, July HRW rose 34 cents. July spring wheat futures ended the week at $8.46, which represented a daily advance of 9 1/4 cents and a weekly rise of 10 cents.
5-day outlook: The feature in the wheat futures markets has been the divergence between HRW and SRW prices, with the nearbys posting a record-high price spread this week. The bullish weekly high close in July HRW today sets the table for more price upside early next week. Despite SRW wheat’s short-covering gains Friday, the bulls will likely continue to struggle in the near term.
Today’s USDA monthly supply and demand report leaned bullish, showing the agency placing its initial winter wheat crop estimate up only 26 million bu. from last year and 100 million bu. less than market expectations. Producers are expected to harvest only 67% of planted area, the lowest ratio since 1917. Old-crop wheat carryover was unchanged from last month and 5 million bu. below the average pre-report trade estimate. USDA made no changes to the supply- or demand-side of the balance sheet. The agency lowered the national average on-farm cash wheat price by 5 cents to $8.85. USDA put the national average on-farm cash wheat price for 2023-24 at $8.00, down 85 cents from the current marketing year.
Weather in the wheat market is presently slightly bearish. World Weather Inc. today reported rain in U.S. hard red winter wheat over the coming week will be welcome, “although not all areas will get a good soaking and some of the rain is falling late in the season.” Concern about the northern U.S. Plains spring wheat planting and some areas in Canada continues.
30-day outlook: Reports say Turkey thinks an extension of Black Sea grain deal is near. However, Russia says there is nothing new to report on a possible renewal of the deal. This situation remains fluid and the agreement remains very shaky. The wheat markets will continue to monitor the daily developments on this market-sensitive situation. Harvesting of the U.S. winter wheat crop in the coming weeks will likely limit upside price potential for the futures markets.
90-day outlook: USDA Thursday reported old-crop U.S. wheat export sales of 26,300 MT, a marketing-year low. Net sales of 333,600 MT were reported for 2023-24. U.S. wheat needs to be more price-competitive on the world market for exports to improve and in turn for sustained price uptrends to be sustained—especially for the beleaguered SRW market. This week’s surge in the U.S. dollar index to a five-week high won’t help U.S. wheat’s position on the export front. We continue to view any significant price rallies as selling opportunities.
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