KANSAS CITY — Myriad factors, some linked to the global coronavirus (COVID-19) pandemic, have increased market volatility, which may continue to affect wheat prices in the coming months, a veteran analyst told a virtual audience June 1.

Steve Freed, vice president, ADM Investor Services, kicked off the Sosland Purchasing Seminar Web Series with a look at the current environment for wheat and market projections for the 2020 crop.

Recent market volatility has been linked to the outbreak of the coronavirus (COVID-19) and spread to global pandemic levels this spring. That led to record global central bank interventions and stimulus expenditures. At the same time, stay-at-home orders led to unprecedented declines in demand for fuel, animal feed and some food, Mr. Freed said.

Also, part of the picture was a steep drop in speculative interest in buying commodities, increased corn and wheat supplies and increased trade tensions between the United States and China, the world’s top two economies.

Looking ahead, record world wheat supplies were expected to continue to weigh on world and US wheat prices, Mr. Freed said.

Also a strong correlation between Russian wheat prices and Chicago wheat futures should continue. Mr. Freed said US markets will monitor Russia’s weather and export situations. Russia recently has seen record-high domestic wheat prices, he noted. That has increased confidence Russia will produce a larger crop in 2020.

Export competition from Australia also was expected to weigh on demand for US wheat as that country’s 2020-21 crop expands to a forecast 24 million tonnes from 15 million tonnes in 2019-20.

For Kansas City wheat futures, Mr. Freed forecast a downtrend after September through 2021 barring a significant weather problem or major demand changes. He pegged US hard red winter production at 730 million bus, down 12% from 833 million bus in 2019.

As for Kansas City hard red wheat premiums, Mr. Freed said a couple of factors will be in the mix. First, expectations were that producers would sell off most soybean and wheat stocks to clear as much space as possible to store corn. Secondly, if average protein levels don’t measure up to expectations and hover near last year’s averages, the basis may firm up in compensation. The market was hoping average protein would rise to around 12%, but early harvest results suggest the average might be closer to 11.5% protein.

Soft red winter wheat prices were expected to trend lower, Mr. Freed said, based on a larger supply — 300 million bus in 2020-21 versus 239 million in 2019-20 — concurrent with lower export demand.

Spring wheat futures prices, too, were expected to decline as production  increases to a forecast 540 million bus from 522 million bus in 2019, said Mr. Freed. If that happens, the Minneapolis basis may remain relatively strong over the next six months, as spring wheat producers are historically “good holders of supply,” Mr. Freed said.

Responding to a webinar viewer’s question, Mr. Freed said he expected Kansas City wheat futures to gain on Chicago futures due to better demand for a smaller hard red winter crop even as the soft red winter wheat supply expands.