Market Matters Blog

While the national average hard red winter wheat basis for this week at 16 cents under September futures is down 1 cent from last week, it is 72 cents higher than the DTN five-year average at this time. While mill and feed demand has been slow recently, demand for export is strong as supplies of milling quality wheat continue to dwindle in Brazil. Recent reports of higher prices being offered by end users in the southern part of Brazil shows how desperate they are for nearby milling supplies. The main problem, however, is that old-crop supplies of wheat in Brazil and Argentina are slim and damage to the new crop in Parana after a recent frost made a good portion of the new-crop wheat there unusable for baking.

Millers are becoming anxious as they wait for recent purchase from the U.S. to arrive, and Brazil has once again suspended their 10% wheat tariff, at least through August, opening the door for more purchases from the U.S. and/or Canada. The USDA GTR stated that for the last four weeks, the weekly volume of wheat barges moving to the Gulf has been 239% higher than the five-year average. Wheat movement increased in the Ohio River corridor by 383%, up 176% along the Arkansas River and up 270% in the Upper Mississippi River corridor. The year-to-date wheat barge volume along the river has increased 114% as export demand from Brazil has increased.

Overall movement of barges downriver was lower for the week ending Aug. 3 as corn and soybean movement slowed last week. The total amount of tonnage was 381,845, which was 13.4% lower than the previous week and 46% lower than one year ago. USDA reported that barges moving upriver totaled 289, down 81 barges from the prior week and down 47.2% from the three-year average. Barge freight has begun to move higher with rates in the Illinois corridor up 10% last week and freight in all corridors higher for the week ending Aug. 6. There has also been more interest in the deferred months as well with prices starting to move higher earlier this week. Water levels have not been an issue as recent rains continue to keep levels safe for full barge loads. The water levels between Memphis and NOLA districts have moved lower but are expected to begin to rise again over the weekend in Memphis. Levels at New Orleans are currently forecasted to slowly decline through early next week, but not severe enough to affect river traffic at this time.

Mary Kennedy can be reached at mary.kennedy@telventdtn.com

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