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Working Speculative Trades: (6/3) Sold September 760 Chicago wheat call 26 1/4, risk 12, objective 0. Closed 1/2.

We'll see how long this market keeps the artificial price discount from the trade war concern. One possible minor change ahead would be dryness concerns for US spring wheat. Export sales are now “okay” for two weeks after a strong start.

French soft wheat ratings fell 5% in the latest week to now only 52% good/excellent. This is the lowest rating since 2016. Harvest was seen at 14% complete on Monday.

As they do every third Thursday of each month, the Climate Prediction Center issued updated long term weather forecasts. For the 30 day period ahead, reaching into mid-August, all of the US will remain with the general trend this summer of above-normal temperatures. North Dakota is responsible for just over 50% of US spring wheat production. Other contributors are Minnesota, Montana, South Dakota, Idaho and Washington. North Dakota and Minnesota are called with normal moisture over 30 days. The other states are lightly below normal. Spring wheat is an early crop so we will not show interest past this period. Harvest will be 50% complete by late August.

Weekly export sales Thursday showed 578,502 tonnes were sold. The trade estimate was 225,000 - 600,000. USDA’s 825 million bushel new crop export goal, for the year that started June 1, is -4% from the five year average sale. Year to date sales are +9% vs. average. To meet USDA's goal remaining sales can fall to -4% vs. average through next May. Today's sale was -2% vs. average. If remaining sales are even with the average we'll exceed USDA's goal by 25 million bushels.

The International Grains Council upped its world wheat production view by 8 million tonnes, now at 801. This is over USDA's 796 view.

Egypt's supply minister stated they have 6.9 months of needs met now. This comes after yesterday's purchase of 770,000 tonnes of wheat from Russia and Bulgaria.

Algeria's purchase yesterday, originally advertised as 600,000 tonnes, was upped to 700,000 - 750,000 on today's update.

The German Farm Cooperatives association estimates Germany's wheat crop at 20.2 million tonnes, -6% from last year. USDA's current all-Europe estimate would be -3% from last year. France and Germany are likely the harder hit this time compared with the rest of the continent.

With the recent unsuccessful assassination attempt of President Trump, and polling now moving firmly into his favor, the trade is showing more interest in pricing in risk of a Trade War. We don't think of China as being a player in US wheat exports but they have picked up in recent years. The last three years saw 42 - 80 million bushels sent to China. In the 2018 and 2019 marketing years there were minimal buys of 2 and 20.

This week IKAR raised its prior 82 million tonne production view for Russia from 6/20 to now 83.2. USDA and SovEcon are at 83.0 and 84.1 respectively. Argus Media appears low at 79.5.

This current crop year will be one with lower world export competition. USDA estimates the year will see 190 million tonnes in non-US exports. The prior year saw 201.

USDA's new crop wheat balance sheet is considered “live”. Ending stocks rose from 758 million to 856. The main reason for this was a big production increase from last month of 133 million bushels. Their 2.008 billion production was much over the 1.909 trade estimate (ALDL 1.920). Frankly, we cannot argue with this. Anecdotal yield reports for winter wheat were quite strong. It was actually the other spring numbers which provided the surprise. The total US wheat yield, of all classes, would be 51.8 bpa. That is the best yield in eight years. The production number was also the best in eight years. We will note their 25 million increases for exports was a bit low. Their current -2% from the five-year average view is still too low. Year to date sales is +10%.

Last month Turkey's agriculture minister announced the country would ban wheat imports from June 21 - October 15. They are attempting to protect domestic farmers from competition. The country harvests winter wheat in July and August. Turkey is the #5 wheat importer in the world with about 10 million tonnes annually.

The 674 upside target from our similar year studies, has been filled. That applied to the July Chicago contract. It did not happen the way the plan suggested but the price was on target. We are now discussing 640 for September Chicago.

Chart: Wheat prices pushed below prior major lows this week. Bulls are not in control of this market. There are upside gaps on the intraday gap but that is not in the trade's view at this time…Rich Nelson