The Good: Canadian weekly wheat exports hit 532,000 tonnes during the past week, which pushed total crop year exports to 15.1 million tonnes with 13 weeks left in the crop year. The wheat exports should come as no surprise as spring wheat has the largest stocks of any commodity. With the stocks of barley, canola and peas tightening, wheat is the only crop left standing for significant exports in the last quarter of the crop year. The Canadian situation is n sharp contrast to the U.S. wheat exports which totalled only 585,600 tonnes. When you include durum exports (like the U.S. does) Canadian exports totalled 819,000 tonnes.
The Bad: The spring wheat market is flatter than a pancake if you look at the spread between the December and September contract. That spread has narrowed to a 1.25 cent per bushel carry over the three month period. MarketsFarm forecasts a dramatic reduction in spring wheat stocks in North America in the 2021-22 crop year, which means that the spring wheat curve should go to an inverse which is bullish. The market appears to be in the process of moving to an inverse and is looking for a trigger to begin the process of moving to an inverse. Maybe the market is beginning to price in the drought scenario!
The Ugly: The drought monitor this week continues a familiar story. Drought conditions cover 100 per cent of the durum growing area in the U.S. and over 95 per cent of the spring wheat growing region. The markets continue to focus on a few dry spots in the Corn Belt, but the dry weather in the Northern Plains are seemingly being ignored. The market needs to pay close attention to this because crops will be needing moisture very soon.