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Slow Grind For Wheat Harvest

Grains managed to stabilize this week, with wheat actually seeing a small rally, albeit short-lived. Too much rain is the main story as it hampers the wheat harvest and begins to stress corn and soybeans.

Downpours, floods, tornadoes, hail and high winds pretty much describe the week in weather for much of the US growing regions. While some would argue that ‘rain makes grain’, even they would have to acknowledge that some places have simply had too much of that rain.

The southern plains harvest is slowly creeping in to Kansas with early results on the disappointing side, and that’s saying something since we weren’t expecting much anyway. Yields in the 10-12 bushel/acre range with 58 pound test weight are significantly less than expected and adding to concerns of even getting enough seed wheat. At least protein is staying pretty high.

Fortunately for the plains, it looks like the weather will clear out and harvest will step it up a notch. We’ll finally see just what the yields are in central/eastern Kansas following those late frosts.

Corn offered some support to wheat as well, with a small revival after an extended sell-off. Record ethanol production last week and the pounding rains have weakened the bearish attitudes, at least for now.

For wheat, one could argue that seasonal lows are in for the Kansas City market as it has basically chopped sideways since early June. That market has a tendency to bottom in mid-June anyway.  For Chicago, mid-July is more common and the harvest lows should be in by then, possibly earlier if the weather continues to batter mature wheat fields in the Midwest.

Minneapolis is likely to be a different story. Abundant supplies of old crop wheat here in the US and in Canada will have to find a home before the harvest in just a couple of months. With much of those stocks being low quality, the feed channel may find yet more wheat making its way into the pipeline. So far, it appears that new crop spring wheat is in generally good shape.

The spreads between the Minneapolis spring wheat futures and the Chicago soft red winter wheat futures have soared in the last month as the Chicago prices have come under so much pressure. However, if indeed spring wheat still has to find a home for last year’s crop while the new crop is coming on, selling that spread could be a big play.

For now, we’ll wait for the hard red harvest to get to northern Kansas, at which point we can have more confidence that harvest lows are behind us. Then we’ll focus on the harvest in the rest of the Northern Hemisphere, which at this point looks like it should be a good one, expecting those harvest lows around mid-July.

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