Spring Wheat Futures Regain Usual Premium

Following a period during which its usual premium had all but disappeared, the Minneapolis spring wheat market is now back trading above its Chicago and Kansas City winter wheat counterparts.

At around US$6.23/bu as of early Wednesday afternoon, the nearby May Minneapolis contract was trading about 6 cents above Chicago and roughly 60 cents higher than Kansas City. That is a marked difference from late last year, when the May spring wheat contract was trading as much as 65 cents below Chicago and 23 cents lower than Kansas City.

Bryan Strommen, market analyst for Progressive Ag in Fargo, N.D., said some the rise in the Minneapolis market against Chicago and Kansas City can be attributed to the dry conditions in the main US spring wheat states of North Dakota and Montana, as well as the rise in corn and soybean prices – which has forced spring wheat to move higher in order to secure enough planted acres this spring.

“We’ll see what we have for acreage numbers, but I think it’ll be down,” Strommen said of 2021 spring wheat planted area. “I think it’s just taking some time for traders to realize that maybe won’t be as many acres because of the competition with other higher-priced commodities.”

At the same time, recent rainfall for crops on the southern Plains has weighed on the winter wheat futures.

In its prospective plantings report released last week, the USDA pegged national spring wheat intentions for this year at 11.74 million acres, down 4% from a year earlier and 3% below the 2016-20 average. In contrast, winter wheat planted area for harvest in 2021 was estimated at 33.07 million acres, 9% above the previous year and up 3% from the 2016-20 average.

With early planting now underway in parts of the US, Strommen suggested prices may rise further yet – not only for spring wheat but corn and soybeans as well.

Source: DePutter Publishing Ltd.

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