Minneapolis spring wheat nearby futures marked a milestone last week, climbing above US$10 per bushel, passing the 2012 high and set to challenge the June 2011 high of more than $11.
That current Minneapolis price has resulted in a Canadian elevator price of around C$12 last week, according to PDQinfo.ca.
It is still a long way to the highest ever Minneapolis spring wheat price, which briefly topped US$24 in February 2008 on a global supply crisis and short covering squeeze.
Last week’s wheat price rally did not appear to be linked to major news, but simply was linked to an increasing market awareness of the short supply of high protein hard red spring wheat.
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The Minneapolis contract led the pack, but Kansas hard winter wheat and Chicago soft winter wheat also rallied.
The wheat market got support from the dry weather dominating Ukraine and southern Russia where farmers are seeding winter crops. Seeding is behind last year’s progress when lack of rain was also a problem in the region.
Although wheat prices are strong, enthusiasm is reduced by Russia’s high tax on wheat exports and soaring fertilizer prices.
Meanwhile, winter wheat seeding in the United States is proceeding at an average pace with 80 percent in the ground as of Oct. 24.
Soil moisture in Kansas, the biggest hard winter wheat producing state, is adequate but it has been dry in Oklahoma and northern Texas.
With another La Nina winter coming, the potential is there for warmer and drier than normal conditions in Texas, Oklahoma and southwestern Kansas.
Moisture is good in the soft wheat areas of the Midwest and the winter forecast for that area shows an increased potential for warmer and wetter than normal conditions in that region.
Winter wheat planting on the North China Plain has increased its pace recently in favourable dry weather after delays earlier this fall caused by near constant rain.
In Australia, harvest of the wheat crop has begun in some areas and fields in the last stages of maturity have generally favourable conditions. There is no change in the forecast for a near-record crop.
The U.S. Department of Agriculture forecasts a wheat crop of 31.5 million tonnes in Australia, not too far off last year’s record 33 million tonnes.
In Argentina, the crop is nearing maturity and although overall weather is hot and dry, enough rain is coming in a timely fashion to maintain production forecasts so far. But if the next few weeks remain hot and dry, production might suffer.
The U.S. Department of Agriculture currently forecasts 20 million tonnes of wheat in Argentina, up from 17.65 million last year.
With smaller crops in Canada, the U.S. and Russia, as well as export taxes in Russia, the European Union is experiencing strong demand for its large crop.
From the start of its marketing year to the end of October, its exports of soft wheat are expected to be close to 11 million tonnes, 25 percent ahead of the year before and the most ever for that point in the campaign.
The USDA expects the EU to be the world’s top exporter this year at 35.5 million tonnes, slipping past Russia, which was the top exporter last year.
Meanwhile, exports from Canada in the 2021-22 crop year are far behind last year’s pace, which is not surprising given the smaller crop.
In the 11 weeks to Oct. 24, Canadian wheat exports stood at 2.96 million tonnes, down 38 percent from the same point last year.
Durum exports stood at 739,300 tonnes, down 19 percent.
Agriculture Canada forecasts for the full crop year wheat exports will total only 13 million tonnes, down 37 percent from last year.
It sees durum exports at 3.1 million tonnes, down 46 percent from last year.
The USDA expects American wheat exports will also be down this year. It pegs all wheat exports at 23.8 million tonnes, down from about 27 million last year, a decline of 12 percent.
The breakdown by wheat type is for hard spring wheat at 6.12 million tonnes, down 21 percent, hard red winter at 9.79 million, up six percent, soft red at 3.27 million, up 74 percent, white at 4.21 million, down 43 percent and durum at 408,274 tonnes, down 46 percent.
Looking ahead, the market is eager to get the new supply that will soon come from Australia and Argentina, but it will also watch the weather affecting winter wheat in the Northern Hemisphere.
If dry conditions continue in the Black Sea region and dry weather establishes a trend in the U.S. southern Plains, buyers could get nervous.
