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Wheat collapsed yesterday with the March contract touching limit down repeatedly during the day session. The only positive news for the market was the winter wheat seedings which dropped 9% from last year to 42.098 million acres and this was below the low end of trade expectations. Soft red acreage was dropped by 25% from last year while hard red seedings were just fractionally lower. This fits with ideas that acreage will also be lower in Europe this year and possibly in the Black Sea region as well. Negative USDA data started with US ending wheat stocks which were raised by 32 million bushels to 655 million. This is the highest ending stocks since the 2001/2002 season and compares with 306 million last year. The increased supply came primarily from a 30 million bushel reduction in projected feed wheat usage. World wheat production was lowered from the previous month’s report, and this is the first time this has happened since early 2008. World production was pegged at 682.8 million tonnes versus 683.9 million last month, and ending stocks were raised about 1.0 million tonnes to 148.36 million tonnes. This is up from 119.37 million tonnes last year and 127 million tonnes the previous year. The quarterly Grain stocks report showed December 1st stocks at 1.422 billion bushels compared to expectations near 1.36 billion. This week’s export inspections got lost in the wave of USDA data. They stood at a better than expected 19.613 million bushels. Cumulative inspections stand at 68.9% of the projected total compared to a 5-year average of 61.0%. Pakistan announced a new tender for 150,000 tonnes of optional origin wheat and traders report that Saudi Arabia has bought between 385,000 and 420,000 tonnes this week. All of it may be from Canada.
CASH NEWS AND TENDERS: Traders report that Saudi Arabia has bought between 385,000 and as much as 420,000 tonnes of wheat, probably from Canada. A Taiwan flour miller is tendering on Wednesday for separate cargoes of 48,760 and 41,660 tonnes of US wheat. Jordan is tendering for 100,000 tonnes of wheat for April-May shipment. Pakistan issued a tender on December 29th for 250,000 tonnes of US white wheat. Deadline for bids is January 10th. They issued another tender for 150,000 optional origin wheat on January 12th. Deadline is on 1/31. Bangladesh issued a tender on December 29th for 100,000 tonnes of optional origin wheat. Bids are to close on January 19th. Traders are still awaiting results of Morocco’s tender for 300,000 tonnes. Syria is tendering for 200,000 tonnes of soft wheat after rejecting offers on a previous tender. Saudi Arabia is expected to tender for 200,000 to 300,000 tonnes of wheat in April-May in addition to a previously announced tender for early January.
WEATHER: In the US, plunging temperatures are expected today in the upper Plains and NW Midwest with scattered snows in the north central US tomorrow. Temperatures are expected to plunge even more to sub-zero levels in much of the northern and central Plains and Midwest by Wednesday night and lasting through Friday.
TODAY’S GUIDANCE: Negative news for wheat include that the Saudi Arabian tender looks to go mostly to Canada. The USDA also found added supply in the US and reduced feed demand on its reports yesterday and the world economy may be continuing to weaken. If we see a bounce into yesterday’s trading range it should be considered a sale.
