CNS Canada — All three U.S. wheat futures markets are finally seeing a corrective bounce, after declining steadily since October.
While how much higher wheat futures can move remains to be seen, the sharp gains this week could be seen as a sign that the downtrend is over for the time being.
“We’re finally coming off of the downtrend that we’ve been in for the past few months,” said Erica Olson, market specialist with the North Dakota Wheat Commission.
While some minor weather concerns in winter wheat growing regions were a bit supportive, Olson said the bounce was more speculative in nature with no extensive fundamental reason for either the recent losses or the eventual correction higher.
“We know (Canada) has a large crop, but there’s no reason for the markets to continue to move lower,” said Olson.
The March spring wheat contract in Minneapolis closed at $6.235 per bushel on Tuesday, up 28 cents from the contract lows hit on Friday, Jan. 31 (all figures US$).
The correction higher was even larger in the Kansas City and CBOT (Chicago Board of Trade) winter wheat contracts. The March Kansas City hard red winter wheat contract settled at $6.465 on Tuesday, almost 40 cents off its lows. March CBOT wheat was quoted at $5.845 on Tuesday, which compares with the contract low of $5.5025 on Thursday (Jan. 30).
Minneapolis spring wheat futures remain at a discount to the Kansas City hard red winter wheat futures now traded in Chicago. Olson expected the abnormal price spread between the two wheat classes could take until the 2014 harvest “to work itself out.”
Looking ahead to the spring, Olson said early indications were pointing to increased spring wheat acreage in North Dakota, although larger winter wheat plantings this past fall could limit some area.
As far as durum is concerned, “there’s not a lot of excitement,” said Olson. If weather conditions co-operate, she expected durum area would hold steady in the state.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.