CNS Canada — All three U.S. wheat futures markets have seen a sizeable corrective bounce after hitting their lowest levels in months to start the week — and could be due for some more strength heading into the spring, a U.S. analyst says.
“I’d like to think that the lows are in for the short term, and we’ll see this market start building itself up again,” said Randy Martinson of Progressive Ag at Fargo, N.D.
Nearby months will probably stabilize, he said, but new-crop contracts will need to put in a premium and go higher.
“The old crop might not be completely out of the woods” as the U.S. dollar remains strong and there is plenty of competing wheat in the export market, said Martinson.
However, declining crop conditions for the U.S. winter wheat crop and fewer seeded acres this year will create an added incentive to seed more spring wheat and/or not tear up winter wheat in the spring.
The September Minneapolis wheat contract could gain 50 cents from current levels, with prices in the US$6.25 to $6.30 area likely needed to bring in the acres, he said.
Looking beyond U.S. supply/demand fundamentals, ongoing tensions in Ukraine also have the potential to move the wheat market if things escalate there, said Martinson.
However, he said the situation there has already been a factor for months and people also tend to forget, as exports from the region continue to move.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.