Good Export Sale: Wheat export sales during this period were reported at 612,408 tonnes. The trade estimate was 250,000 - 600,000. It was the best sale for this week in five years.

Export Narrative: USDA is at 850 million bushels for this year's export goal. That is +1% from the five year average sale. Year to date sales are even with the five year average. To meet USDA's goal remaining sales can fall to -8% through May. This was a positive week at +40% vs. average. It helps to offset last week's low -43% sale.

The $6.00 Wheat Goal: As you know we fully expect US export sales to pick up when Russia and Ukraine old crop exports decline in the coming weeks. However, at this point we have not seen any real consistent change in the general sales pace yet. In prior commentaries we had noted we need to see exports run +50 million bushels over USDA's view to support Chicago wheat to $6.00. To do that sales would have to consistently run +20% from average from now through May. That is the goal for a bull market.

Lowered 2024 Russian Crop: The agriculture ministry announced completed 2024 grain crop numbers. Their prior 83.0 million tonne wheat crop estimate from 11/7 was lowered to 82. This is not a market moving issue. USDA has been at 81.5 for two months. SovEcon's latest estimate was 81.4.

Egypt Purchase: The new state grain buying agency of Egypt announced it had procured 1.267 million tonnes of wheat, mainly from Russian sourcing. They suggest they have their needs covered through June.

Algerian Purchase: This week's purchase by Algeria's state grain buying agency was revised up from 630,000 tonnes to 1,170,000. This is a bit over their prior milling wheat purchase of 600,000. The trade mainly expects Black Sea origin.

Lowered Russian New Crop Exports: This week we saw three groups release low estimates for Russia's new crop export. IKAR suggested 41 million tonnes, the Russian Grain Union said 40.0 and SovEcon was at 36.4. USDA currently estimates 47.0 for this old crop year. They won't release a new crop estimate until May.

Lowered Russian Old Crop Exports: On Monday SovEcon lowered their prior 44.1 million tonne export view for this old crop season down to 43.7. They are much below USDA's current 47.0 view.

Russian Export Quota: This month the Russian government lowered its prior 11.0 million tonne export quota (limit) from 2/15 - 6/30 down to 10.6. That is much under last year's actual exports at that time, 19.9.

US Dollar Rally: Though the US dollar set back from recent highs it has still posted clear gains this year. ​Wheat prices and US dollar index values don't always have the normal negative relationship that many people think they do. However, from September 27 - December 20 the relationship is quite strong. The correlation is -0.90. A higher dollar is back to being negative for wheat pricing.

Extended US Moisture Situation: Spring rains are the main yield determinant for winter wheat, not conditions right now. With that in mind NOAA and some private US weather forecasters suggest light dryness moving up from Mexico in the new year. By April it may be running in the Western ¼ of Texas up through Nebraska. It is far too early to suggest this is a reason to buy wheat. But it could be a spark that we are looking for.

Near Term US Moisture Situation: One of the themes of this fall/winter was a beneficial change to winter wheat soil moisture. US winter wheat ratings started at 38% good/excellent as of 10/27 and ended at 55% as of 11/24. The month of November saw a return of above normal rains from Nebraska through Northwest Texas. December was above normal. The forecast into January is mostly normal to lightly above normal.

USDA US Supply/Demand: USDA lowered their ending stock view from 815 million bushels to 795. Exports were raised by 25 million on this report. 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.

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 lows for two of the three contracts were established in recent days. KC held out. The discussion over a Head & Shoulders bottom is no longer valid with the Chicago contract. If KC rebounds immediately, all the way back up to 566, a discussion could be started there. While we can argue for higher prices from changes to fundamentals in the months to come, the market has shown no interest of that from a chart perspective in the short term...Rich Nelson