Play Turner’s Take Ag Marketing Podcast Episode 252
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This week we go over our thoughts on wheat for the rest of this year and 2021. Wheat will most likely be a follower of corn and soybeans. We see SRW stocks building next year while HRW stocks declining. KC could trade over Chicago wheat in the 2021-2022 marketing year. Currently front month KC is 60 yo 70 cents under Chicago. We can KC eventually trade over Chicago in 2021. If you want to know more then make sure you take a listen to this week’s Turner’s Take Podcast
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For the 2021-22 marketing year we see SRW wheat acres 6mm and HRW acres about 21.5mm acres. That is an increase of almost 1mm SRW wheat acres but HRW stays about the same. The increase in acres for the Chicago contract should bring soft red winter wheat ending stocks up to around 135mm bushels, which increases stock/usage from 38% to 45%. This will most likely be a bearish factor for SRW (Chicago) Wheat.
HRW (KC) will most likely see a draw on stocks. A few years ago stock/usage for HRW wheat was over 60%. Now we see it about 35% for the 2021-2022 marketing year. If corn and soybeans stay elevated (above $4 and $10 respectively), it is possible KC wheat could be $6 and Chicago in the mid $5s.
Our best bet for wheat in 2021 is KC gaining on Chicago. After years of burdensome KC stocks and tighter Chi stocks, we see that trend reversing. Right now Dec KC trade 60 to 70 cents under Chicago. We think the July 21 spread can get close to parity and the Dec 21 spreads have KC eventually 20 cents over Chicago.
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Dec 2020 KC vs Chicago Wheat (OLD CROP)
July 2021 KC vs Chicago (NEW CROP)
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