Milling & Baking News - August 15, 2017 - 22

Grain Market Roundtable X

1851

cents per bu

wheat plantings and normal weather would result in a futures for the second quarter, which he said he thought
larger crop. The market already begins to look forward would drop because the market will begin looking to
to the harvest by the second quarter, Mr. Meyers said. what's coming up for the 2018 crop, with tight old crop
"What I've seen over the years is that you don't want to supplies and futures dropping in the second quarter,
get too aggressive in wheat in the quarter before new it will be difficult if not impossible for the basis to
crop," he said.
Both Mr. Freed and Mr. Meyers
suggested a more active approach
Cash spring 14% protein premium
to covering spring wheat basis even
155
through the end of the current crop
year.
"While the spring wheat basis
125
seems relatively high, it's actually
below the five-year average," Mr.
Freed observed. "I think current
95
basis coverage is rather limited, so
my suggestion is bakers add to basis coverage, especially in spring
65
wheat, just in case it takes off after
harvest. The spring wheat market
is not in as much a carry as win35
ter wheats are, so I would suggest
Aug.
Oct.
Dec.
Feb.
April
June
Aug.
buyers lock in the basis until next
2016
2017
year 's new crop."
Mr. Meyers said, "I'm not quite
sure where some of the deferred basis quotes are for weaken. "If the market has to source 14%-protein wheat,
14% protein. But my recommendation is if you can cov- and farmers are going to be encouraged to sell it when
er 14% protein at 110c or 115c over the future or lower, futures are going down, it's more than likely going to be
I'd be adding coverage." Mr. Meyers pointed out unlike reflected in basis levels," he said.
Like Mr. Freed, Mr. Meyers said spring wheat basis
coverage through the current crop year might be in order.
Mr. Beeson had a less aggressive stance. He indicated
they've been looking for first-quarter 2018 spring wheat
basis coverage. "But we're not getting really attractive
offers, so we're not going beyond that," he said. "If you
can cover first-quarter basis at what fourth-quarter values are, you should do it, but we're not finding such
offers to be available."
Turning to hard red winter wheat, Mr. Meyers suggested Kansas City futures coverage through December
and into the first quarter of 2018. He said he'd hold back
from covering the second quarter, expecting Kansas
City futures may be lower then as the market looks forward to the 2018 crop. With regard to hard red winter
wheat basis coverage, he said 90c to $1 over the K.C.
future may be a good value for 12.6%-protein wheat to
cover basis all the way through the crop year.
Mr. Freed pointed to the two-tier market for the 2017
hard red winter wheat crop because of its low average
protein. With regard to K.C. futures and cash basis coverage, he noted many buyers have probably done as
much as they can or want to do for a while given the
relatively high basis for high-protein wheat.
Mr. Beeson said the basis break in Kansas City caught
GETTING THE RIGHT PRODUCT
YOUR
many by surprise. "But we would not push basis out
TRUSTED
PARTNER
TO THE RIGHT LOCATION,
until we do futures," he said. "We have the third-quarSINCE
ter basis covered but not beyond."
AT THE RIGHT TIME
Mr. Freed noted with regard to employing more hard
red winter wheat-spring wheat blends this year to bring
up flour protein levels, that most large baking companies already have decided on plans to get them through
the crop year. For flour buyers, "you might just want to
get through this year, because next year, prices may be
www.ldcom.com
lower," he said. MBN
- Jay Sjerven
22 / August 15, 2017 XMilling & Baking News

bakingbusiness.com / world-grain.com

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Milling & Baking News - August 15, 2017

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