Wheat prices have soared as the market tries to find a price that will ration demand for the small supply left from the 2007 harvest.
The American grain exchanges this week expanded the trade limit on wheat to 60 cents US from 30 cents per bushel. There is a formula for further increases if the market continues to lock limit up.
The emergency move was prompted by five consecutive limit up moves in Minneapolis last week.
In a day of wild trade Feb. 11, Minneapolis was limit up in the March contract at $16.13 per bu., but new crop contracts dropped. Chicago March soft wheat fell 45 cents and Kansas City March hard winter wheat dropped 57 cents
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
The Minneapolis March contract between Feb. 4 and Feb. 11 rose $1.80 while the new crop September contract rose by about 90 cents to $11.15 per bu. Since the beginning of January, new crop spring wheat rallied 29 percent compared to canola’s rally of 17 percent.
These developments favour wheat over canola in Canada. But the seesaw battle for acreage is likely not over, and we might see the market focus shift to oilseeds from wheat. Influential oilseed market analyst Oilworld says recent weather challenges likely mean the South American soybean crop will not exceed last year’s 115.7 million tonnes.
There was more bad production news when recent cold weather damaged rapeseed crops in China and India. The extent of the damage is not yet clear, but if significant, it will force the two Asian giants to buy even more oilseed and oilseed products in the coming year.
Western Europe seeded less winter canola last fall.
Oilseed demand is expected to keep growing.
All this puts the spotlight squarely on North America’s spring campaign, the next crop in the production cycle.
Oilseed prices might yet have to rally to get the acres of American soybeans and Canadian canola the market needs.
