CNS Canada — Minneapolis (MGEX) spring wheat futures have climbed back to their highest levels in two months and could remain strong relative to other wheat classes over the next few months, according to an analyst.
The nearby July 2016 contract is trading at about US$5.50 per bushel, while the July 2017 contract is now above US$6.
Tom Lilja, market analyst with Progressive Ag in Fargo, N.D., said the deferred prices should be especially attractive to producers, given the bearish fundamentals underlying the old-crop wheat market.
“There is plenty of old-crop wheat on the world market,” said Lilja, adding that the Northern Hemisphere’s advancing winter wheat harvest would likely make it hard for the Kansas City and Chicago futures to see much more room to the upside in the near future.
The spring wheat growing season, meanwhile, is only just getting started.
As a result, the uncertain production prospects and need to keep some weather premiums in the market should lend some relative support to the Minneapolis futures.
“It’s always a weather market at this time of year,” said Lilja.
Wheat will also take some direction from soybeans, he said, and tightening U.S. soybean carryout projections should be supportive for wheat and corn as well.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.