CNS Canada –– U.S. wheat futures posted solid gains over the month of June but appear to be stalling out in the early days of July as the market looks for more fresh supportive news.
“The bull needs to be fed every day, and right now it’s not getting anything to keep it going,” said Randy Martinson of Progressive Ag in Fargo, N.D.
Concerns over excess moisture in the winter wheat crop in the southern Plains were a major driver behind the June rally in wheat and could still provide some support.
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However, “no matter what happens, world (wheat) stocks won’t be tight,” said Martinson.
While there are weather concerns in other wheat-growing regions of the world, including dryness in Canada, he said world supplies should remain more than sufficient to meet demand overall, which will limit upside potential in futures.
However, while there may be little upside left in the futures, Martinson said there should still be some strength in the cash market.
Wheat futures will be priced to compete with corn in the feed market, forcing values lower, he said. However, “good-quality, high-protein wheat will fetch a premium” in the cash market.
The latest rally in wheat futures caused basis levels to deteriorate in the U.S. countryside, but Martinson said basis would go the other way — with cash bids holding firm — as futures retreat.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
