Spring Wheat Prices Relatively Stable Ahead of Holidays

(Farm and Ranch Guide) – In the last couple weeks before the holidays local cash prices for hard red spring wheat remained relatively stable, trading in a range from $4.50 to $4.85 per bushel.

Also, the Minneapolis futures have remained at an unusually high premium to other wheat classes and is still $1.20 higher than both Chicago and Kansas City futures.

“All bets are we’ll likely see that continue into the foreseeable future because we have such a large supply of winter wheat classes,” said Erica Olson, marketing specialist for the North Dakota Wheat Commission.

In its recent supply and demand report released earlier this month, USDA did make some adjustments, primarily in the world wheat numbers.

The biggest change came in the numbers for Australia where production was increased by 173 million bushels to push total wheat production to a record 1.2 billion bushels.

“Not too long ago there were some concerns with that crop because of frost and wet conditions causing some quality concerns, but that ended up having no impact on yield,” Olson said. “I assume there is still some quality issues, but we haven’t heard much of that, and they’re not harvesting their crop yet.”

With the higher production number Australia’s export number was also raised by 130 million bushels to now total 882 million bushels.

All that just means more supplies on the market which already has ample supplies, he added.

USDA also estimated small production increases in China, Brazil and Europe. And, with those changes, world ending stocks are even higher this month at 9.3 billion bushels.

“If there’s one thing the market didn’t need it’s more supplies, so it wasn’t the most supportive report from USDA,” she said.

There were actually no changes to the U.S. all wheat situation, however, within the various wheat classes there were some minor adjustments. For spring wheat, U.S. imports were lowered from 42 million bushels to 40 million. As a result ending stocks declined slightly from 210 million to 208 million bushels.

Olson noted there has been some helpful market news as well. India recently announced they were going to remove its import duties on wheat due in part to the fact they’ve had a couple years now with production related issues. It’s estimated they could import the largest amount of wheat in about 10 years. That number is pegged at 220 million bushels.

“If you look at the most recent year’s imports they were literally almost zero, so that’s a pretty big jump in one year. It’s unlikely the U.S. will supply any of that wheat, but that demand is good because it will take some of the supply off the world market,” Olson said.

Another factor to watch is the U.S. winter wheat crop. USDA won’t release the first official planting estimate for another month, but the consensus is that acreages will be lower for this year. Early estimates are that winter wheat acreage could decline by 8-10 percent in the winter wheat region.

“With the huge stockpiles they have and the low prices, that’s not a big surprise,” Olson pointed out.

The other thing the market is watching with the winter wheat crop is areas that have been fairly dry which have been affecting crop conditions.

“Another positive for the market is we do continue to see good export demand,” Olson said. “Total U.S. wheat sales are about 32 percent higher than a year ago. Hard red spring wheat sales are 227 million bushels which compares to 172 million bushels a year ago.

“Again, we’re seeing real strong demand from quality customers like Japan, Philippines, China, Indonesia and, actually increased demand from Canada,” she said.

“Other than that, with the colder weather lately things in the market have slowed down and with the holidays coming up we don’t anticipate a lot of market movement until after the new year,” she concluded.