September 2018 Winter Wheat Prices Recap – FarmLead (GrainCents)

Winter wheat prices in September were impacted by a surprise uptick in Russian production, a bearish WASDE report, and a StatsCan report that projected larger Canadian yields.

As it’s now the end of the month, let’s take a look at how winter wheat prices performed in the past 30 days.

SRW Wheat Prices

HRW Wheat Prices

Winter wheat prices pushed lower as markets kept a close eye on production and inventory numbers around the globe.

In the month of September, front-month Chicago SRW wheat prices were 6.6% lower than where August ended, but they are still 14% higher than where we were at this time a year ago.

Similarly, front-month Kansas HRS wheat prices lost 2.3% over the course of September, but are 15.5% higher than a year ago!

Winter wheat prices in Q3 were down about 1% since Q2.

The headline this month centered on Russia, where the USDA projected a hike in production by 3 MMT. This uptick to 71 MMT has quelled concerns that Russia may limit exports.

In that same report, the USDA said that U.S. ending stocks will be 935 million bushels, an increase of 2% year-over-year. That said, the figure was actually below analysts’ expectations of 941 million bushels.

Meanwhile, StatsCan updated wheat yields of all types in the Great White North to 46.9 bushels per acre. This is up from the 43.9 bpa reported a few weeks ago in their first estimates of Canadian wheat production. Naturally, an uptick in Canadian production would be a surprise given the downward revisions that we had seen in recent weeks.

Finally, we’ve been keeping a close eye on developments for the crop in the European Union.

Recently, Coceral cut its wheat yields for the EU to their second-lowest levels in five years. The group projects that wheat output will come in at 129.9 MMT. That figure was about a 9 MMT cut from the group’s previous estimate. That figure is also well below the 141.9 MMT produced last year.

For our GrainCents readers, we’re watching a variety of factors that might affect winter wheat prices: 2 are bearish, 5 are bullish, and 7 are noise.

(If you’re not familiar with what “noise” is, then we recommend you check out our GrainCents risk management process towards winter wheat prices.)

This month, GrainCents investigated topics such as:

 

Hedge fund managers turned more bearish on wheat prices by the end of September. As of September 25, money managers had a net short position on SRW wheat of 1,119 contracts.

In Kansas City, money managers held a net long position on HRW wheat of 3,054 contracts.

As we head into October, out attention will focus on winter wheat planting progress, export levels out of the Black Sea, Europe’s need for quality wheat, and price premiums for high-protein content.

If you want to be more on top this sort of action on winter wheat markets, so you can make more sense of grain markets, join us for your free trial at GrainCents.

About the Author
Brennan Turner

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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