Wheat Holds for Another Week

May 8, 2020

Wheat Holds for Another Week

Another mixed week for the wheat space, with this week seeing Minneapolis the leader higher with a gain of 10 cents. Chicago gains 6 cents while Kansas City lost 3. Corn and soybeans were each up 1, bouncing after early week losses.

While the Kansas City chart looks solidly more supported than the Chicago or Minn charts, the Kansas City/Chicago spread lost 9 cents after establishing a new high for this move on Monday. KW is stuck in a range, still holding the April lows but lacking enough energy to push higher. Chicago is also in a range but at a lower level, and Minn put in new contract lows on Monday before bouncing higher.

Weather conditions are moderating with good rains across Europe and the Black Sea. The southern region of Russia still looks a bit on the dry side, but spotty rains and some regionally soaking rains are keeping worries in check.

Here in the US, there is increasing evidence of freeze damage in the southwest plains, enough to support KW but not enough to spur it higher. High heat and dryness of late likely further stressed the crop but again, the market does not seem worried.

Crop conditions in hard red winter wheat were mixed this week. Kansas improved 2 points to 42% good/excellent. Oklahoma, where most of the freeze damage occurred, improved 2 to 64% and Colorado improved 1 to 38%. Texas lost 7 points to 50% and Montana lost 2 to 61%.

Soft red winter wheat might see some frost damage this weekend, but it isn’t expected to be enough to move prices. So far, the soft red crop looks good, helping to explain the steady decline of Chicago prices to Kansas City.

As we near harvest in the plains, I look for that spread to widen back out a bit, unless we find disappointing yields in hard red country. Eventually, I still look for that spread to revert to the norm with Kansas City holding a premium over Chicago.

Ukraine is reporting that old crop all grain exports are up 19% over last year at a record 51.5 MMT. We know they are near their limit on wheat exports and will likely see them shut it down before the end of their marketing year on June 30. They also report their spring grain planting progress at 86% complete.

Export sales last week were a disappointing 380 TMT. With new crop offers from the Black Sea significantly discount to old crop prices, the US is struggling to compete in the export arena.

STATS Canada reported planting intentions and stocks. All wheat acres are projected at 25.4 million, roughly equal to the estimate and up 400,000 over last year. wheat stocks were pegged at 17.8 MMT, up 1.3 MMT over last year.

USDA will release the May supply/demand report on Tuesday, the 12th. Markets will likely be quiet until after the report. The seasonal tendency for wheat to rally into early May has not panned out this year, and once the report is behind us, the seasonal usually heads lower as harvest gears up in the south.

There are lots of report of poor growth in the southern plains, but at this point, it will have to be poor harvest reports to push wheat higher unless the dry conditions return to the Black Sea, which is not in the forecast.

Louise Gartner,

Spectrum Commodities

Listen to the daily podcast on wheat, cattle and closing market reports: http://spectrumcommodities.podbean.com/

THIS IS A SOLICITATION. Reproduction or rebroadcast of any portion of this information is strictly prohibited without written permission. The information reflected herein is derived from sources believed to be reliable; however, this information is not guaranteed as to its accuracy or completeness. In an effort to combat misleading information, Opinions expressed are subject to change without notice. This company and its officers, directors, employees and affiliates may take positions for their own accounts in contracts referred to herein. Trading futures involves risk of loss. Past performance is not indicative of future results.