Grain Spreads: New Lows in Wheat

Sean LuskGeneral Commentary


Wheat prices continue to move lower as cheaper Eastern European and Russian supplies get dumped on the market. Therefore, all three domestic wheat classes in order to remain somewhat competitive, will drop in tandem with cheaper origins in Europe to remain somewhat competitive. Since Russia has cancelled the Black Sea corridor out of the Black Sea in late July that enabled Ukrainian food and energy to exit to foreign end users, this market has been a somewhat surprising strong sell in my opinion since. Chicago wheat is down over $2.20, while KC is down a whopping 3.04 given the new low made today. However, one of the biggest reasons why is that Ukraine with the help of European partners created their own pathway to export their grain with the help of UN neighbors. Second there is no weather premium as of now that is prodding funds to short cover en masse.  Kansas City leads the way lower for the wheat complex as it continues to erase its large premium to the Chicago market. Simply put, wheat is seeking demand, and not finding takers. The first crop progress report was released yesterday showing the first national winter wheat rating coming in at 47% good to excellent. This compares to the terrible crop a year ago that was at 28%, average is 45%. For the day Chicago wheat fell 9 3/4 cents to $5.56 1/4 and near the session low. Prices hit a two-week low today. December KC wheat dropped 15 3/4 cents at $6.29 1/4. Prices closed near the session low and hit a more-than-two-year low. December Minneapolis wheat fell 8 1/2 cents to $7.09 1/4. In summation winter wheat futures markets today were hit by another wave of technical selling, a solid rally in the U.S. dollar index and lower crude oil prices in my opinion.

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Sean Lusk

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