CNS Canada — Spring wheat futures in Minneapolis are outpacing the Chicago and Kansas City winter wheats to the upside, and tight world supplies of higher-protein wheat should remain supportive until the 2017 North American crop becomes better known.
“A lot of it is the protein market,” said analyst Bryan Strommen of Progressive Ag in Fargo, North Dakota, on the relative strength in spring wheat.
The poor quality and low protein of the K.C. hard red winter wheat crop limited the amount of higher protein wheat from that side, while disease issues and the late harvest in Canada also cut into the total available supplies.
“Really, the only (high) protein milling wheat in North America is in the Dakotas,” said Strommen.
As a result, he expected the spread between Minneapolis and the other lower protein wheats would remain wide.
The MGEX March wheat contract was trading Thursday at about $5.40 per bushel, which compares with the K.C. March wheat at $4.13 per bushel (all figures US$). The current premium of $1.27 per bushel compares with only 20 cents at the same point a year ago.
Adding to the supply tightness of higher-protein wheat was the glut of corn and soybeans grown in the U.S. this year, said Strommen.
Many elevators were filled up with corn and beans, he said, leaving wheat on the back burner and possibly forcing the Minneapolis market to be bid up.
Looking ahead, Strommen said nearby attention in wheat will be on the weather conditions for the U.S. winter wheat crop. “The winter wheat has gone to sleep, and we’ll see how it wakes up,” said Strommen.
The U.S. dollar should be another factor. The U.S. dollar index rallied to 14-year highs on Thursday, which plays into the wheat market as a strong U.S. currency causes end-users to look to other, cheaper alternatives.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.