CNS Canada — U.S. wheat futures have shown some strength over the past month, but advancing harvest pressure from soybeans and corn may come forward to limit any additional independent strength in wheat over the next few weeks.
After setting contract lows on Oct. 1, all three U.S. wheat markets have trended higher through the first three weeks of October.
Statistics Canada data confirming Canada’s much smaller wheat crop, and a U.S. Department of Agriculture report pointing to smaller world stocks than earlier thought, contributed to the strength, said Bryan Strommen, market analyst with Progressive Ag in Fargo, N.D.
“U.S. wheat is now priced at a more competitive level, and we’ve seen an increase in export demand over the past two, or three, weeks,” he added.
Dry weather in Australia and other weather issues elsewhere in the world could provide some further support, he said, but added the “upside could be limited, if there is more pressure in corn and beans.”
While record-large U.S. corn and soybean crops now being harvested are a bearish factor overhanging wheat futures, Strommen said quality issues with U.S. and world crops could lead to premiums for better-quality wheat on the cash side.
That demand for higher quality wheat could also help Minneapolis spring wheat move back to a premium over the Kansas City hard red winter wheat market.
Strommen noted the severe drought in the southern U.S. Plains over the past year left hard red winter wheat in a tight supply situation, but plantings for next year’s crop have gone well and recent rainfall has boosted moisture conditions.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.