CNS Canada –– U.S. wheat futures have trended higher over the past few weeks and still have some more room to the upside, as weather concerns for the country’s winter wheat crop and the need to bring acres to spring wheat should provide some support, according to an analyst.
Given the declining U.S. crop conditions and general uncertainty for winter wheat in many other parts of the world, “I was expecting wheat to perform better than it has,” said Randy Martinson of Progressive Ag at Fargo, N.D.
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While wheat futures were posting losses on Tuesday, all three U.S. contracts were still well off the lows hit at the beginning of March.
Dryness in some parts of the U.S. Plains was one supportive factor for wheat, Martinson said, while seeding delays for corn in the Delta and southern Corn Belt should also lend spillover support.
“We could get another 30 to 50 cents (to the upside), especially if we see acres come in a little bit lower in the next report from the USDA,” he said.
With spring wheat seeding just around the corner, Minneapolis spring wheat could outperform relative to the other wheat markets, Martinson said.
The Minneapolis futures will be working “to secure acres so they don’t go to soybeans,” he said, adding “if they don’t (remain relatively strong) it will take away the incentive to plant spring wheat.”
While Martinson was generally bullish on wheat, he said the struggling export market was one factor limiting the upside potential as U.S. wheat remains expensive internationally.
Part of that was due the relative strength of the U.S. dollar. While the currency has come off its nearby highs, Martinson said, it still hadn’t dropped far enough to convince buyers to show more interest in U.S. wheat.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
