The wheat complex continues to be led by the non-relenting Minneapolis market, where cash markets are soaring with no end in sight. Of the last 10 trading sessions, Minneapolis March has been limit up five times, with three more near limit up days. Only one of those 10 days even closed lower. The spread between Minn March and Chicago March surged $2 in that time frame, while it gained $160 against Kansas City.
So the spring wheat market, which usually barely makes the radar screen, is far and away the leader of the wheat complex, and will likely continue to be for the next few months. Extremely tight supplies and the prospect of another decline in acres have spring wheat users biting their fingernails; it's a long, long way until that harvest.
But, it's not just spring wheat supporting the wheat complex. We still have the issues of hard red winter wheat struggling through a dry fall and winter in many of the major growing regions. This winter so far has offered more than one extremely cold snap with little snow cover that could be setting the stage for winter kill. And the cold weather has also descended upon much of the soft red wheat as well.
Interestingly, if we do get notable winter kill, it could actually solve more problems than it creates. A loss of soft red acres would hardly be missed and pave the way for more corn and bean acres. A loss of hard red winter acres in the northern Plains could pave the way for more spring wheat acres. And a loss of hard red acres in the central/southern plains could pave the way for more feed grain or cotton acres.
Certainly, the loss of hard red acres would have more market impact than the loss of soft red, but nevertheless, the freeing up of acres for the other crops, all of which really need more acres, could be a huge development. It will be with great anticipation that we await springtime and wheat breaking dormancy.
And it's not just spring wheat supplies or acres or possible winter kill supporting the wheat complex. Demand has yet to be really rationed. Granted, it does take price corrections to spur some sales, but export sales have been very impressive. Last week's sales of 669 TMT were well above trade estimates. About one-third of those sales were actually for new crop, so clearly there is strong demand even at these high prices and already for new crop.
A look around the world finds that India's crop is well under way and the dryland wheat is experiencing continued drought, with little rains forecast in the near future. While much of their wheat is irrigated, they cannot afford to lose yields on those dryland acres. January is normally a dry time for them anyway, but February needs to produce some rains or we've got another weather market on our hands.
There is talk that Argentina may re-open their wheat export registrations soon. Estimates had them having sold about 7 MMT of wheat before they imposed their export restriction. They are suggesting they may allow another 1- 1.5 MMT for sale. USDA has them pegged to export 10 MMT for this marketing year.