Milling & Baking News - April 11, 2017 - 27

X
July wheat futures prices
$6

per bu

Minneapolis

Kansas City
Chicago

$4
Nov.
2016

Dec.

Jan.
2017

tonnes from the record 239 million
tonnes forecast for the current year.
"Even though production this year
is declining, U.S. and global supplies
are still going to be very large," Mr.
Meyers said. "And I think the reason
prices still could go down from here
is that we still have the uncertainty
about crop size. If the crop turns out
with trend yields or a little better, both
in the United States and worldwide,
you'll take the weather premium out
of the market."
Mr. Meyers said if good weather allows premiums to be taken out of the
corn and soybean markets as well,
there may be even greater pressure on
wheat prices.
While the winter wheat harvest was
several weeks away, what Mr. Freed
called "multi-million-dollar" rains fell
across parched areas of the Southwest
in the last couple of weeks, and wheat
condition ratings as published by the

Feb.

March

April

U.S.D.A. were on the rise. Weather will
be a key driver in agricultural futures
markets in the next several weeks, but
the heavy rains washed away many of
the worst worries for winter wheat.
"While I think wheat prices are going to come down from where they're
at today, I don't expect them to fall to
the levels we saw last year," Mr. Meyers said. "The fact that supplies in the
United States and the world will be
smaller will keep prices from falling to
last year's levels."
Asked for his forecast for wheat futures in the next several weeks, Mr.
Freed said, "We're in a pretty tight
range. Many people think Chicago
wheat may average $4.20 a bu between now and the fall, if there's no
weather problem. It seems a little early
to break below $4, and there's currently no reason to trade above $4.50. Still,
it's troublesome to see planted acres
as low as they are. It doesn't give you

Grain Market Roundtable

any comfort to know that if there is a
weather problem, there's not a lot of
wheat out there."
Mr. Meyers said the Kansas City
July future may fall into the low
$4-per-bu area, $4.10 or $4.15, during the next couple of months. He
said Chicago futures may trade
around those same levels. With
Minneapolis futures currently trading near $5.40 a bu, Mr. Meyers said
he expected that market to weaken
but to a lesser degree than Chicago
and Kansas City. He suggested the
Minneapolis July may trade down
to around $5.20 a bu.
Asked how bakers might want to respond to the current market, Mr. Freed
said April-June flour coverage stood
at about 60% with soft flour coverage
a bit lower because of the relatively
strong soft red winter wheat basis.
July-September coverage was about
20% for hard wheat flour and a little
less for soft flour. At the same time,
some baking companies already have
covered all or a portion of their flour
needs through December.
"They don't mind paying the carry
because they can make a profit at these
price levels, and they don't want to be
surprised some day with a weather
problem," Mr. Freed said.
He said there was no reason not
to cover remaining flour needs
through the second quarter of 2017
and increase July-September coverage to about 30% or 35% in fairly
short order. MBN

Record acres, high stocks expected
to pressure soybean prices

he U.S. Department of Agriculture on March 31 added to its
already record-high 2017 U.S.
soybean planted area forecast with a
number that exceeded analysts' average expectation. At the same time, the
U.S.D.A. also estimated March 1 U.S.
soybean stocks above what the trade
expected.
The U.S.D.A. in its annual Prospective Plantings report said U.S.
farmers indicated they would plant
89,482,000 acres of soybeans this year,
up 7% from 83,433,000 acres in 2016,
up 2% from its initial forecast of 88
million acres given at the Agricultural
bakingbusiness.com / world-grain.com

Outlook Forum in late February and
1.5% above the average trade expectation of 88.1 million acres.
Nearby soybean futures fell 15c to
17c a bu immediately after the data
were released, and prices sank to
eight-month lows early last week before recovering some ground by midweek. Futures were expected to continue falling in coming months, with
added pressure from large soybean
harvests and increased export competition from Brazil and Argentina.
The old crop July soybean future
ended near $9.57 a bu on March 31,
down $1.35½ from its 2017 high of
Milling & Baking News XApril 11, 2017 / 27

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Milling & Baking News - April 11, 2017

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