Wheat Prices Edge Higher on Crop Weather Concerns

Key Moments

Early Wednesday Trade and Tuesday’s Futures Performance

Wheat futures are showing gains across most contracts early on Wednesday, following a mixed performance in the previous session. On Tuesday, Chicago soft red winter (SRW) wheat saw nearby contracts add ½ to 2 cents, while deferred contracts slipped between ¼ and 1 ½ cents. Open interest in Chicago wheat declined by 7,779 contracts on the day.

Kansas City hard red winter (HRW) wheat futures recorded modest advances on Tuesday, closing with fractional to 1 ½ cent increases across all listed contracts. Open interest in KC HRW fell by 5,713 contracts. In contrast, Minneapolis spring wheat futures ended Tuesday’s trade weaker, closing with losses ranging from ¾ to 2 cents.

U.S. Winter Wheat Progress and Condition

According to the latest NASS Crop Progress report, 92% of the U.S. winter wheat crop was headed as of Sunday, which is 7 percentage points ahead of the typical pace. Harvest progress reached 11%, compared with the average of 6% for this point in the season.

Crop condition ratings for winter wheat slipped, with 25% of the crop categorized as good to excellent, down 1 percentage point. The Brugler500 index for winter wheat declined by 6 points to 263. For hard red winter wheat, an average of the five primary HRW-producing states came in at 211 on the Brugler500 scale, noted as the lowest on record. By comparison, the average for soft red winter states was reported at 362.

Spring Wheat Planting, Emergence, and Ratings

Spring wheat planting is effectively complete, with 98% of the crop in the ground, running 3 percentage points ahead of normal. Emergence was reported at 87%, which is 7 percentage points faster than the average pace.

Spring wheat conditions improved, with 52% of the crop rated good to excellent, an increase of 5 percentage points. The Brugler500 index for spring wheat rose by 7 points to 350. Only Washington state registered a decline in condition ratings, falling 3 points, while Montana climbed 13 points and Minnesota advanced 9 points on the index.

Weather Constraints in the Southern Plains

Harvest activity in large portions of the Southern Plains may be constrained over the coming week. NOAA projections indicate expected rainfall totals of 1 to 3 inches across areas of Texas, Oklahoma, and Kansas, which could slow fieldwork in those regions.

U.S. Production Outlook Ahead of Crop Report

Wheat production projections are set for an update on Thursday in the monthly Crop Production report. A Bloomberg survey cited in the article shows analysts looking for total U.S. wheat production of 1.555 billion bushels. Within that total, winter wheat output is seen at an average expectation of 1.04 billion bushels, which would represent an 8 million bushel reduction if realized.

Hard red winter wheat production is projected to decline by 7 million bushels to 508 million bushels. Soft red winter wheat, by contrast, is expected to edge higher by 1 million bushels to 302 million bushels.

EU Export Activity

The European Commission estimates that EU wheat exports from July 1 through June 7 totaled 22.05 million metric tons, an increase of 1.53 million metric tons compared with the same period a year earlier.

Futures Settlements and Current Quotes

Tuesday’s settlement prices and current Wednesday movements for key wheat contracts are shown below.