Minneapolis December Wheat Futures Above $10/Bushel
The December Minneapolis wheat futures contract surpassed the “elusive” $10 benchmark Friday morning on its way to a new contract high mid-day. Fundamentally, wheat (spring wheat specifically) remains the most bullish of the grains, with ending stocks estimated at a 14-year low, and spring wheat supplies declining 44% year-over-year per the USDA’s October WASDE Report.
Another factor propelling spring wheat futures higher is the continually increasing export price for Russian wheat with 12.5% protein. DTN Senior Market Analyst, Dana Mantini, reported early this morning that, “Russia’s wheat export tax will rise to a hefty $67 metric ton (mt) this week, and by month end is expected to move to $70/mt, as Russia attempts to hold down internal food inflation.” This marks the 15th consecutive week of increasing export prices for Russian wheat, and has pushed additional export business to the EU. As such, this has pushed Paris milling wheat futures to new highs as European wheat exports are up 64% year-over-year.
- World wheat stocks the lowest in 14 years
- U.S. HRS production down 44% vs last year
- Forecasted La Nina calls for colder and wetter through Spring 2022 in HRS areas. This can affect plantings and fieldwork in a crop that already has the lowest stocks of the 3 wheats.
- Technically, the uptrend is healthy. We are expecting more new highs in all 3 wheats (HRS & SRW charts below and attached).
- Russian wheat prices up for 13th consecutive week
- Russia to implement export quota as of February 15th, 2022
- Dry weather is expected to result in lower Russian winter wheat planted area than last year. Winter wheat typically accounts for around 70% of total Russian wheat production.
- Iran is expected to more than triple its wheat imports in the 2021/22 marketing year and could import up to 8 million tons.
- World food prices hit 10-year high & Inflation
- Supply chain woes and worker shortage (affects basis)
- Only ¼ of US Hard Red Winter (HRW) wheat belt dry.
- The record Indian wheat crop this year has contributed to strong exports
- Ukraine’s wheat crop is estimated to be up solidly to 31.6 MMT from last year’s USDA estimated 25.4 MMT.
- Dry Australia areas shrinking while excess rains across north China Plains ease this weekend. Eastern Europe and Ukraine slated for beneficial rains along with central and eastern portions of US plains.