US wheat futures settled 7-10 cents lower amid limited fresh news and ahead of the USDA’s March WASDE. The US forecast is actually trending drier across the Plains in late May, but there’s no compelling evidence to suggest the USDA will change its global balance sheet on Thursday. Recall world wheat ending stocks are pegged at a record 266 MMTs, vs. 252 in 16/17.
It’s also becoming more evident that current wheat prices are acting to slow demand and thus ration available supplies. Our work suggests that, amid ongoign drought, US HRW production 2018 could fall 100-130 Mil Bu from the previous year. It’s also possible that exports fall by 50-75 Mil, which will act to keep end stocks at a comfortable 900-925 Mil Bu. Rationing may be needed – but it’s happening currently.
Otherwise, Russian logistics will be improving amid warming temps and ARC’s contacts suggest that a record pace of wheat shipments will be ongoing throughout spring. A collapse in CBOT values isn’t likely until the Plains pattern changes. ARC maintains a strategy of selling CBOT rallies.
