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Minneapolis Wheat enjoying premium status

elaine-kub

A relatively strong supply and demand situation for Hard Red Spring varieties is supporting Minneapolis Wheat prices.

Market analyst Elaine Kub says the rally has generated a premium of more than $1.25 over both Chicago and Kansas City wheat.

“The basis has been following that too.  The cash market is following that strength in the futures, so this is not just a speculative rally.  This is a fundamental rally due to a relatively strong supply and demand situation for higher protein milling wheat than we have for the winter wheat varieties that are just crushingly over-supplied in this country.”

She tells Brownfield Minneapolis Wheat futures might be peaking around the $5.40 per bushel level.

“Already, the premium for spring wheat compared to the benchmark Chicago contract is very far out of line.  It’s almost two standard deviations away from what we would expect.  Ordinarily, you’d see a 15 percent premium for Minneapolis futures over Chicago futures.  Whereas right now there’s a 40 percent premium for Minneapolis futures.”

Kub says the milling wheat market is starting to balk at these high prices, especially on the export side.

 

 

 

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