National average HRW basis for this week at 17 cents under September futures is unchanged from last week and is 37 cents higher than the DTN 5-year average at this time. USDA reported in its weekly Grain Transportation Report that wheat inspections increased at the Mississippi Gulf and PNW ports. Even with recent wheat export inspections at a new high for the year, most of the current business is covered through September. However, Brazil may need to buy more HRW after reports that 33% of wheat in Parana has been damaged by frost and other weather-related conditions. If U.S. exports to Brazil continue past August, Brazil will need to waive its 10% tariff scheduled to be back in force on September 1. China has also been quiet recently for new business and recently purchased 55,000 metric tons of Australian wheat. Dow Jones reported to date China has purchased 3.7 million metric tons of U.S. wheat for 2013-14 shipment and 2.2 mmt of Australian new-crop wheat. China is expected to exceed Indonesia as the largest buyer of Australian wheat as their poor quality new crop is sending them looking for milling quality wheat outside of their country. U.S. winter wheat harvest is nearly complete with most of the northern states ahead of their 5-year average progress. Harvest is starting to move through Canada with the Manitoba crop report on Monday reporting winter wheat harvest is progressing with reports of good yield and protein so far. Ontario's crop progress report last Friday showed rain continues to slow the winter wheat harvest in parts of the province. Reports of high yields and good quality are coming from the northern region, but fusarium continues to be an issue in other parts of the province with some of the wheat testing over 2ppm. Saskatchewan reported last week that winter cereal crops were beginning to get cut in the southwestern and west-central regions. Stats Canada reported in its survey-based production report Wednesday that all-wheat production in Canada at 30.6 mmt which, if realized, would be the largest Canadian wheat crop since 1991.
While wheat has moved south for export, there are continued reports of corn moving north to supply starved ethanol plants. The Army Corps of Engineers reported that over the past 2 weeks, 76,000 mt of corn has moved upriver. News reports have stated that up to 1,000 barges loaded with southern corn could move upriver prior to the northern corn harvest. Average DTN corn basis for this week is currently $1.01 over the 5-year average at this time and continues to remain strong as supplies of old-crop corn have dwindled and end users are nearly desperate for supplies to keep plants running. A higher corn basis in the Midwest allows sellers in the south to cover transportation costs and still enjoy a profit.
Overall barge grain movement down river for the week ending August 17 was 24% lower than one week ago at 324,304 tons and was 39.5% lower than last week. A total of 229 barges moved down river, which was 19.4% lower than last week, but 380 grain barges unloaded in New Orleans which was up 1% from the prior week. Barge freight for the week of was steady to a little higher, especially in the deferred months as shippers ready for previously contracted new-crop sales of grain. A barge line reported Tuesday that water levels were slowly moving lower in the St. Louis corridor and south and without substantial rain to keep levels up, draft restrictions may have to be put in place. As of Thursday, water levels are at 4.6 feet in St. Louis and current predictions as of today's weather forecast shows river levels could drop below 3 feet by the weekend. If levels reach 3 feet at Thebes, Ill., a trouble spot most of last summer during the drought, drafts may have to be lowered, meaning barges carry less grain. Remember that normal drafts run between 9 to 12 feet depending on what stretch of the river the barge travels. When water levels recede, barge lines will lower drafts to avoid running aground in shallow areas and further restrictions may also be imposed by the Coast Guard.
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