Winnipeg, Oct. 4 (CNS Canada) – Minneapolis spring wheat futures are pulling away from their winter wheat counterparts, as quality issues with the North American spring wheat crop bring in protein premiums
And there was more room to the upside in spring wheat, said market analyst Bryan Strommen of Progressive Ag in Fargo, North Dakota.
The Kansas City and Chicago winter wheat contracts hit 10 year lows in September, and continue to hover just above those lows.
However, the demand for higher quality and higher protein wheat was helping the Minneapolis futures distance themselves from the winter wheat contracts, Strommen said
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The U.S. winter wheat crop was large in terms of bushels, “but was disappointing quality wise,” said Strommen.
Tight U.S. spring wheat supplies, together with concerns over harvest delays and quality issues with the Canadian crop were also supporting the Minneapolis futures.
The Minneapolis December contract was sitting roughly at US$5.22 per bushel at midday Oct. 4, which was up by about 40 cents over the past month.
In the same period the Kansas City December contract initially edged modestly higher but then fell in recent days and was trading around $4.06 per bu. on Oct. 4.
At the beginning of September the premium of Minneapolis wheat over Kansas was about 80 cents and has widened to about $1.20 now.
That spread is still fairly modest.
Strommen noted that the two contracts were more than $6 apart at one point in 2008.
He said the movement in the futures was not yet seen as explicitly at the grain elevator level, but he expected the lack of high quality wheat supplies would become more of an issue as more harvest quality details become available.
From a chart perspective, the December Minneapolis spring wheat contract is trading right below its mid-August high of $5.30 per bushel. A break above that “opens the topside up,” with the next resistance coming in at $5.60 and then again at $5.80, said Strommen.
