CBOT weekly outlook: Higher spring wheat all about dry North Dakota

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MarketsFarm — As heat and dryness prevail across North Dakota, prices for Minneapolis (MGEX) spring wheat will continue to rise, according to broker Ryan Ettner of Allendale Inc. at McHenry, Ill.

Ettner pointed to the weekly crop progress report from the U.S. Department of Agriculture that showed the condition of spring wheat in North Dakota was all of 31 per cent good to excellent. That compared to the country-wide rating of 43 per cent good to excellent, which dropped two points on the week.

While a few other of the half dozen states on which USDA reports incurred spring wheat ratings worse than North Dakota’s, Ettner noted the latter is considered the spring wheat-growing state for markets to follow.

“It quickly explains why the three different wheat markets are trading as differently as they are,” he said, pointing to the losses Chicago and Kansas City wheat have due to good growing conditions those crops are experiencing this year.

“While North Dakota is having problems, the rest of the country is doing well.”

Those good conditions showed up in the first corn ratings issued by USDA this year, coming in at 76 per cent good to excellent, which the broker said was five points above the five-year average. That has led to declines in corn prices at the Chicago Board of Trade (CBOT).

At this point in the calendar year, markets are primarily focused on the weather, which in Ettner’s opinion accounted for 90 to 95 per cent of the prices movements in corn.

Any big purchases to be made by China would be felt in Chicago, but wouldn’t have the same influence behind it as the weather currently holds, he added.

As for soybeans, Ettner said USDA will issue its first ratings for that crop when the department’s next crop report is released Monday (June 7).

“We will want to see if [soybeans] comes in as strong as the corn did. If it does, we’ll see a similar reaction next week on the beans,” he predicted.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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