Wheat May '19 (ZWK19)Get Real-Time Futures
Wheat Futures Market News and Commentary
Wheat futures were fractionally to 2 1/2 cents lower in the winter wheat contracts on Tuesday. MPLS was firm to 4 1/2 cents higher. There is still significant snow cover in the Dakotas and Minnesota. As it melts, water levels are rising in that area. US FOB prices were below French as of last night, but evidence of improved export sales is what the market wants and has not seen. Brazil will begin allowing importation of 750,000 MT of US wheat under a tariff rate quota following a meeting between President Trump and Brazil’s President Bolsonaro on Tuesday.May 19 CBOT Wheat closed at $4.56 1/2, down 1/4 cent,May 19 KCBT Wheat closed at $4.35 3/4, down 3/4 cent,May 19 MGEX Wheat closed at $5.65 1/4, up 4 1/2 cents--provided by Brugler Marketing & Management
If you’re keeping up to date on my basis postings, you’ll recall my most recent piece on soybeans (“Soybean Basis: The Weight of Futures”) talked about the often-inverse relationship between futures and basis. In other words, if the futures market posts a strong rally, grain merchandisers will often soften basis a bit on the idea that futures will do a good enough job of sourcing enough supplies to meet demand. Last week saw national average soybean basis firm, slightly, despite solid gains in futures, until Friday.Spring wheat was different, though. Here we saw the national average basis (cmdty National Hard Red Spring Wheat Index minus futures) actually weaken as the futures market firmed late in the week. To be exact, the May Minneapolis futures contract gained 5 1/2 cents, paltry indeed compared to the rest of the grain and oilseed complex, while national average basis weakened 1 1/4 cents from the previous to finish at 53 1/4 cents under the May. When one considers much of the U.S. Northern Plains remains buried by feet of snow, in mid-March, it seems counter-intuitive that spring wheat basis should be weakening.Until you factor in where bushels are being held. Most of the wheat in the U.S. winds up in commercial storage, where ownership is more easily transferred from seller to buyer. Therefore, if one doesn’t have to wait for the snow to melt before pulling grain out of an on-farm bin, it creates a situation where winter (into spring) weather doesn’t create a similar search for supplies like what has been seen in corn and soybeans. Darin NewsomPresidentDarin Newsom Analysis Inc.
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