Glacier FarmMedia – United States wheat prices have been in something of a quandary lately, with any hope of higher prices curtailed by the need to remain competitive with cheaper Russian wheat, according to Tom Lilja of Progressive Ag in Fargo, North Dakota.
“The big albatross over all of this is lower Russian wheat prices. There’s been a lot of tender activity lately. A lot of countries are seeking international tenders,” Lilja commented, noting that Russia has continued to receive the bulk of the global business. “So our prices can’t go too high or we’re non-competitive with Russian values.”
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Lilja pointed out that U.S. wheat prices essentially bottomed out during late November, with the market recovering somewhat in December.
“However, it’s really rangebound trade,” he cautioned. “After putting in a low, the [speculative] funds have been short covering some of their contracts. However, when we get up to the 50-day moving average, the technical traders are coming in and selling at those technical levels,” he explained. “We had days it was up 15 cents [per bushel] and then down 15 cents.”
During December, he said the spread between Minneapolis spring wheat and Chicago winter wheat narrowed from US$1.40 per bushel to about US$1 currently.
“The biggest reason for that was Chicago was a lot cheaper,” he said, pointing to China’s flurry of soft red wheat purchases which caused the Chicago futures to rise and narrowed the spread.
Lilja held out a measure of hope for U.S. wheat prices improving a little bit more.
“There’s an old saying, ‘if the bears feast at Thanksgiving, the bulls will feast at Christmas,’” he quoted.
Lilja cited two reports that provided something of an upswing for wheat. One was from the Risk Management Agency of the U.S. Department of Agriculture, which suggested the country’s planted winter wheat acres for 2023/24 could be down by two million acres, maybe as much as three million.
The second report was about soft wheat acres in France, in that wet conditions this fall has led to a 10 per cent decline in plantings. At slightly below 10.5 million acres, it’s the least amount of wheat sown since 2000.
— Glen Hallick reports for MarketsFarm from Winnipeg.
