December Chicago wheat was trading 6 cents higher near 7:30 am CST. Outside market forces look positive today and news of very poor crop conditions ahead of dormancy for the winter wheat crop helped to support.
A revision down in Russia wheat production and news of a very poor start to the winter wheat crop overnight helped to support solid gains. A dry outlook for the central and northern plains for the next week added to the positive tone. The weekly Winter Wheat Planting report showed that 88% of the crop is planted compared to 81% last week and 86% last year. The 10 year average for this time of year is 87%. The weekly Winter Wheat Conditions report showed that only 40% was rated good/excellent compared to 46% last year. Last year conditions were poor and this year's conditions are the poorest on record (our records back to 1986). While crops can still do well with good weather in the spring, poor conditions going into dormancy suggests the potential for lower yield. South Dakota, Nebraska, Colorado, and Montana are a significant concern with emergence in these states compared with the 5-year average at 23% vs. 88%, 74% vs. 93%, 77% vs. 91% and 51% vs. 79%. Nebraska good to excellent readings were just 9% with 49% rated poor to very poor. A whopping 61% of the South Dakota crop is rated poor to very poor.
It was announced yesterday that Egypt bought 300,000 tonnes of Romanian, Russian, and French wheat for December 21-31 shipment. US prices levels have narrowed their premium to France but cheap offers out of the Black Sea continue to be bought by Middle East customers. Tunisia also bought 125,000 tonnes of optional origin wheat in there tender overnight. The wheat supply situation in Ukraine is adding tension to the market after their Ag Minister announced that wheat exports would not be banned. The minister went on to say that they planned to increase their prior export estimate from 5 million tonnes to 5.5 million tonnes. Additional support yesterday was linked to concerns that the Argentina and Australia wheat crops could see additional cuts to production in next week's USDA report and as a result shift demand to the US border.
Russia's Institute for Agriculture revised their wheat production forecast to 37.1 to 37.6 million tonnes from 40 million previous and the group lowered their export forecast for November to 1.2-1.3 million tonnes from near 2.5 million tonnes in October.
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