Wheat Outlook November 28, 2016 Volume 25, Number 71

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1 Market Situation Today s Newsletter Market Situation Crop Progress 1 Weather 2 Grain Use 4 Commitment of Traders 5 Marketing Strategies 217 Wheat Marketing Plan 8 Upcoming Reports/Events 9 Crop Progress. Today s Crop Progress report shows no changes to the condition ratings of the U.S. wheat crop. The crop index score [cci=(1*very poor)+(2*poor)+(3*good)+(4*fair)+(5*excellent)] remains steady at 357, up from 355 last year and an average of U.S. Winter Wheat Crop Condition Ratings % Oct 31-Oct 7-Nov 14-Nov 21-Nov 28-Nov 5-Dec 12-Dec 19-Dec 26-Dec 2-Jan 9-Jan 16-Jan 23-Jan 3-Jan 6-Feb 13-Feb 2-Feb 27-Feb 6-Mar 13-Mar 2-Mar 27-Mar 3-Apr 1-Apr 17-Apr 24-Apr 1-May 8-May 15-May 22-May 29-May 5-Jun 12-Jun 19-Jun 26-Jun CCI Very Poor Poor Fair Good Excellent Average 216: 55.3; Trend: 46.8 bu/ac Texas Winter Wheat Condition Ratings % CCI /24 1/31 11/7 11/14 11/21 11/28 12/5 12/12 12/19 12/26 1/2 1/9 1/16 1/23 1/3 2/6 2/13 2/2 2/27 3/6 3/13 3/2 3/27 4/3 4/1 4/17 4/24 5/1 5/8 5/15 5/22 5/29 6/5 6/12 6/19 6/26 7/3 Very Poor Poor Fair Good Excellent Average 216: 32.; 1-yr Average : 3.7 bu/ac 1

2 The condition rating of Texas wheat improved again this week with a 2% reduction in wheat rated poor and a 2% increase in fair. The crop index is 328, up 2 points from last week and above the average of 324. Last year at this time the wheat index in Texas was 362. The percentage of wheat in the poor and very poor categories increased this week in the top producing states. Kansas and Oklahoma both increased 2%, Washington and Colorado up 1%, Montana unchanged, and Texas down 2 points. % of 217 Winter Wheat Rated Poor and Very Poor Top wheat producing states, Kansas Oklahoma Washington Montana Colorado Texas 24-Oct 31-Oct 7-Nov 14-Nov 21-Nov 28-Nov USDA, NASS, Crop Progress 11/28/216 Weather. Consistent with those crop ratings, a comparison of drought maps from late October to last week shows increasing dryness in western Kansas and eastern Colorado. The precipitation outlook for the next several days is dry followed by increasing rain chances for Texas and Oklahoma. 2

3 Precipitation Forecast ( Days 1-3 Day 4-5 The ENSO discussion this week from the Climate Prediction Center continues to forecast a mild La Nina this winter. The most recent weekly temperature departure from normal is -.4 C; the departure for the most recent tri-monthly period (August/September/October) was -.7 C. ENSO Alert System Status: La Nina Advisory La Nina conditions are present. Equatorial sea surface temperature (SST) are below average in the central and east-central Pacific Ocean. La Nina is slightly favored to persist (about a 55% chance) through winter C El Nino.5 Neutral. Oceanic Nino Index (ONI) Actual Measurements Predicted -.5 La Nina Latest actual weekly SST departure -2. El Niño/Southern Oscillation (ENSO) Diagnostic Discussion, 28 November

4 Grain Use. Another strong showing for wheat export sales was reported last week. Wheat export sales commitments were 26 million bushels for the week of November 17 th. The sales pace needed to reach the 216/17 marketing year target is 11 million bushels per week. Sales for the year are 69% of the total, right at where we normally are at the end of November. Texas gulf export wheat inspections continue to run much above last year and near normal levels. 216/17 U.S. All Wheat Export Sales Commitments Mil bu Projected MY Total 1, Cumulative Net Sales Weekly Net Sales Sales pace to reach target: 11.1 Export Sales Commitments for the week 11/17/216: 26 million bushels Total Export Sales Commitments this marketing year: 675 million bushels 69% of the 216/17 MY Export Sales Target of 975 million bushels (November WASDE) Normal sales commitments by the end of November: 69% USDA, Foreign Agricultural Service: November 25, 216 1, bu 3, Wheat Inspected for Export Texas Gulf MY to date 16/17 to 15/16: +91% 16/17 to avg: -13% 25, 2, 15,, 5, 6/2 7/2 8/2 9/2 1/2 11/2 12/2 1/2 2/2 3/2 4/2 5/2 AVG 215/16 216/17 U.S. Dept. of Agriculture, Agricultural Marketing Service. Grain Transportation Report. November 24,

5 Hard red winter wheat is still price competitively as a feed grain, $5.16 per hundredweight, the same as milo, compared to $6.2 corn. $/cwt Cash Feed Grain Prices Triangle Area, Texas High Plains Corn/cwt Wheat/cwt Sorghum/cwt USDA, AMS, State Grain Reports Commitment of Traders. The Commitment of Traders report released this afternoon shows a generally more bullish outlook by speculators compared to positioning the week before. Net long contracts held increased for corn, soybeans, and both wheat contracts, though soybeans and KC wheat are still the only contracts in positive net long territory. Prices were higher this week in every case. Managed Money, net long positions 8-Nov 15-Nov 22-Nov contracts price change Corn (13,478) (74,3) (45,638) 28, Soybeans 125,121 96, ,644 18, Chicago Wheat (11,926) (131,867) (111,18) 2, KC Wheat 1,478 1,965 1,886 8, Total 2,195 (17,449) (3,216) 77,233 5

6 Speculative Investment in Corn Net Long Contracts 3, 2,, (,) (2,) (3,) Price, /bu Net Long Price Speculative Investment in Soybeans Net Long Contracts 25, 2, 15,, 5, (5,) (,) Price, /bu Net Long Price 6

7 Speculative Investment in Chicago Wheat Net Long Contracts (2,) (4,) (6,) (8,) (,) (12,) (14,) (16,) (18,) Price, /bu Net Long Price Speculative Investment in KC Wheat Net Long Contracts 15, 1, 5, (5,) (1,) (15,) (2,) (25,) (3,) (35,) Price, /bu Net Long Price 7

8 The spread between new crop December Kansas City wheat and March is 19 cents today, above full carry for that 9 day period (3 months x 6 cents per bushel/month = 18 cents). Any percentage of carry above 67% is generally considered to be a bearish commercial market indicator. IV Qtr Oct 28-Nov net change % change DEC 16 KC Wheat % MAR 17 KC Wheat % Difference % Carry DEC to MAR 92% 16% 14% JUL 17 KC Wheat % Marketing Strategies 217 Wheat Marketing Plan. I have not yet priced any new crop wheat. I am waiting to see if we get any price strength from what looks to be fewer acres in 217 and a drier than normal weather outlook this winter. /bu July 217 KC Wheat and Marketing Plan 7 Early Season Price Rally / Early Crop Conditions Emerging from Dormancy/Late Season Conditions Harvest /2/216 5/11/216 5/2/216 6/1/216 6/1/216 6/21/216 6/3/216 7/12/216 7/21/216 8/1/216 8/1/216 8/19/216 8/3/216 9/9/216 9/2/216 9/29/216 1/1/216 1/19/216 1/28/216 11/8/216 11/17/216 11/29/216 12/6/216 12/13/216 12/2/216 12/27/216 1/3/217 1/1/217 1/17/217 1/24/217 1/31/217 2/7/217 2/14/217 2/21/217 2/28/217 3/7/217 3/14/217 3/21/217 3/28/217 4/4/217 4/11/217 4/18/217 4/25/217 5/2/217 5/9/217 5/16/217 5/23/217 5/3/217 6/6/217 6/13/217 6/2/217 6/27/217 7/4/217 7/11/217 8

9 Upcoming Reports/Events. December 9 December 23 January 8-14 January 12 September 18-2 October 2-3 October October 3-31 Crop Production WASDE Cattle on Feed Hogs and Pigs The Executive Program for Agricultural Producers, information available at tepap.tamu.edu Crop Production WASDE Grain Stocks Winter Wheat and Canola Seedings Master Marketer, Uvalde-San Antonio area Mark Welch, Texas A&M AgriLife Extension Economist 6 John Kimbrough Blvd, Suite 335 College Station, Texas Tel. (979) Fax. (979) JMWelch@tamu.edu The opinions and recommendations expressed are solely those of the author and are intended for educational purposes only as part of the Texas A&M AgriLife Extension Service. The author and Texas A&M AgriLife Extension Service assume no liability for the use of this newsletter. The Texas A&M AgriLife Extension Service provides equal access in its programs, activities, education and employment, without regard to race, color, sex, religion, national origin, disability, age, genetic information, veteran status, sexual orientation or gender identity. The Texas A&M University System, U.S. Department of Agriculture, and the County Commissioners Courts of Texas Cooperating 9