Commentary
It is my belief that the wheat futures markets today fell victim to a big surge in the U.S. dollar index to another 20-year high, prompting further worries about already slack U.S. wheat export demand. The wheat markets also lost more ground today when the corn and soybean futures markets backed well off their overnight highs and finished near their session lows. Winter wheat harvest is progressing rapidly amid hot and dry weather in the central U.S. In my view it is prompting farmer selling and related commercial hedge pressure on the wheat futures markets. Weekly U.S. wheat export inspections totaled 309,802 MT, in line with expectations from 250,000 to 450,000 MT. Given that supply side issues have maybe been priced in the demand side of the ledger is not helping the bulls in my view. It is my opinion that the US export situation will continue at best as precarious. This comes as the Russian export tax retooling puts the US at a larger disadvantage. US values were back to a $20/mt FOB premium to Russian on Friday and needs to realign to buy in exports. In my view I would sit on the sidelines in this market for now and wait for tomorrows WASDE at 11am Central. The good to excellent category for US Spring wheat continues to improve coming in at 70 percent good to excellent vs 66 percent last week. Last year we were at just 11 percent. The Minneapolis or Spring wheat crop has dropped below 10.00 on the Board and now sits at a negative percentage level for 2022.
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