Light Hit to US Wheat Sales: USDA added 25 million bushels to their prior export view on Tuesday. To meet USDA's newly raised goal remaining sales can fall to -12% through May. Eight of 11 recent weeks have exceeded this goal. This week, included in that 11, was -24%. We still have another +25 million bushels vs. USDA on our balance sheet on the expectation of better sales in the coming months.

Larger Argentine Crop: This week the Rosario Grains Exchange raised its view of the Argentine wheat crop from 18.8 million tonnes to 19.3. USDA appears a bit low at 17.5. Though Argentina is not a large producer it does export 75% of production.

Argentine Harvest: The Buenos Aires Grains Exchange estimates the wheat harvest is 64% complete. Argentina and Australia are both in active harvests.

Wheat Tender: The state grain buying agency for Saudi Arabia has tendered to buy cargoes of wheat. Ten cargoes are sought with a total of near 595,000 tonnes. Delivery is expected from February to April. Normally Russia would be a favored supplier here. With the government's move to restrict exports the trade is discussing a wide range of potential suppliers. These include the Black Sea, Argentina, Brazil or Australia.

Higher Ukraine Prices Expected: Consistent with everyone's expectation, the Ukraine Agricultural Club expects higher wheat prices into January. They are currently discussing a $20 - $25 per tonne increase in the coming weeks based on expectations of lower old crop exportable supplies. As you know, everyone expects lowered Russia and Ukraine old crop competition ahead. Using USDA's 16.5 million tonne wheat export view, and July - November completed exports of 9.0, the months of December - June ahead may only see 7.5 for exports. That is a sharp drop from last year in the same period, -5.2 lower.

Stable Early December Weather in Ukraine: The state weather agency of Ukraine suggested early December weather did not have a negative impact on the crop. The trade still holds clear concern over this coming new crop. The eastern ⅓ of the country is in drought. Central and western areas are normal and lightly dry.

USDA US Supply/Demand: USDA lowered their ending stock view from 815 million bushels to 795. The trade expected a minimal change to 814 (ALDL 787). Imports were raised by 5 million today. Exports were raised by 25. Their current 850 million bushel view for the year would be +1% from the prior five years. Year to date sales are already +3%. This will increase even more in the coming months as old crop export competition declines due to Russia and Ukraine. USDA’s current whole-year export views for those countries would require a significant pullback in competition. For those two countries combined, December – June exports ahead would only run 30.4 million tonnes. That is a full -15.0 from last year in the same period.

USDA World: World crop wheat ending stocks were minimally raised, 257.6 last month to 257.9. Aside from -1.3 million tonnes for the EU crop there were no other production changes. Exports were lowered -1 for both EU and Russia while Ukraine was upped by +0.5. The general world balance sheet for wheat is positive. The stocks/use estimate of 32.1%, a measure of tightness of supply, is at 11 year lows. Also, the export story for the US has opened up. USDA now sees exports from competitors to drop from 201.1 mt last year to 190.5.

Higher Russian Export Taxes: The Russian government can actively curb exports through both export limits (quotas) and export taxes. They jumped the wheat export tax by 32%. It is now at the equivalent of $49.31 per tonne starting December 11. Back in August it was as low as $2.60.

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Wheat prices and US dollar index values don't always have the normal negative relationship that many people think they do. However, since September 27 of this year the relationship is quite strong with correlation of -0.88. A higher dollar is back to being negative for wheat pricing.

Tariff Talk: President Trump announced on social media that on his January 20 inauguration he would, “… sign necessary documents to charge Mexico and Canada a 25% tariff on all products coming into the United States.” He noted this would remain in place until the two countries clamp down on hard drugs entering the US as well as illegal immigration. He also separately noted the US will be charging China an additional 10% tariff, above any additional tariffs, on all of their many products coming into the US.

US Wheat Imports: In the completed 2023/24 marketing year the US imported 138 million bushels of wheat. 82% came from Canada, zero from Mexico and zero from China.

US Wheat Exports: There are no retaliatory tariffs from other countries against the US yet. We exported 707 million bushels of US wheat last year. Zero went to Canada, 17% to Mexico and 11% was to China.

Chart: New contract lows were hit recently for Chicago and KC. After those lows, higher pricing was seen. From a chart basis, bears may be running out of momentum. We'll get an answer to this hypothesis soon. The break late this week may be forming the right shoulder of a bullish Head & Shoulders bottom...Rich Nelson