Glacier FarmMedia COVID-19 & the Farm

Spring wheat slowly regains premiums

mgex may wheat
MGEX May 2021 wheat (candlesticks) with K.C. May 2021 wheat (yellow line) and CBOT May 2021 wheat (green line). (Barchart)

MarketsFarm — Nearby Minneapolis spring wheat contracts have historically traded at a premium compared to their Chicago and Kansas City soft wheat counterparts.

And after a winter during which that premium had all but disappeared, spring wheat has so far made gains in 2021.

Since the start of the year, both spring wheat contracts have traded above $6 per bushel for the first time since August 2018 and have regained their premiums over Chicago and Kansas City wheat (all figures US$).

By comparison, the Minneapolis May contract was trading as much as 65 cents lower than Chicago wheat last October and 23 cents lower than Kansas City wheat last December.

Bryan Strommen, market analyst for Progressive Ag at Fargo, N.D., said while the smaller size of the Minneapolis market was a factor, there was also no impetus for spring wheat to gain on the markets.

“Spring wheat has just been treading water here and (there hadn’t been) a lot of news to make it move,” he said.

However, he added, dry conditions in North Dakota and Montana, as well as fierce competition for acres from corn and soybeans, may be fueling the recent rise in prices for spring wheat.

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

Prices may rise even further, not just for spring wheat, but for corn and soybeans, as well.

Strommen acknowledged low carry-in stocks and the U.S. Department of Agriculture’s (USDA) prospective plantings report, release March 31, which delivered lower-than-expected projected acres for those crops.

“We need to have a pretty decent crop just to replenish supplies. I think that’s why we’re seeing strength in the new-crop months over the past week more so than the old-crop, because of the smaller acreage numbers.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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