CNS Canada –– Concerns over poor-quality North American wheat crops have seen the Minneapolis spring wheat premium widen over Kansas City winter wheat — and that spread could grow even larger heading into the summer, according to a U.S. analyst.
The nearby MGEX spring wheat contract settled up 3.75 cents on Wednesday, while the corresponding K.C. hard red winter wheat contract lost half a cent.
July wheat in Minneapolis settled Wednesday at $5.4475 per bushel, which puts it at a premium of $1.18 over the K.C. July contract (all figures US$).
Read Also
Canada’s global trade gap narrows; U.S.-bound exports hit new low
Canada’s trade deficit narrowed in December even as its share of exports to the United States dropped to the lowest level on record, barring two months during the peak of the COVID-19 pandemic, data showed on Thursday.
The spread between the two commodities has widened considerably over the past year, with MGEX wheat only trading at a 50-cent premium to Kansas City at the same point in 2016.
Bryan Strommen of Progressive Ag at Fargo, N.D. described the spread as “historically wide” and expected it would continue to widen, “especially if we see some protein demand come into play.”
Recent snow in Kansas, followed by rain, led to concerns over the quality and protein content of the winter wheat, he said.
Millers are short bought, and have upped their demand, he said. Major world wheat buyer Egypt is also looking for better-quality wheat, he added, while Canadian seeding issues are also underpinning U.S. futures.
“Maybe there are some opportunities for some better (price) levels,” said Strommen.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
