WASHINGTON – Kansas City and Minneapolis wheat futures posted new contract and multi-year highs this week. The Minneapolis continuous spring wheat future (with the December 2021 contract the current leading month) traded up to $10.47 a bu on Oct. 26, eclipsing the most recent previous high at $10.35 in July 2012. A test of the May 2011 high at $10.78 a bu was viewed as possible.

The Kansas City continuous wheat future (with the December 2021 contract the leading month) traded up to $7.90 a bu on Oct. 26, the highest level since May 2014. Chicago wheat futures advanced last week but traded below their Aug. 13 contract highs posted on Aug. 13, but those prices, in turn, were the highest for Chicago wheat futures since December 2012. The Chicago continuous wheat future (December contract) traded up to $7.77 on Oct. 26 compared with the contract high for the December 2021 future at $7.86½ set on Oct. 25.

While the current advance in wheat futures has been breathtaking, all-time highs in wheat futures posted during the global supply crunch of 2007-08 remained secure from challenge for now. In the case of Minneapolis wheat futures, the all-time high posted in February 2008 was an astounding $24.26 a bu. Kansas City and Chicago wheat futures set their all-time highs above $13 a bu at that time as well.  

While corn and soybean markets may be transitioning from being supply-led to demand-led markets, the wheat market was all about supply, Steve Freed, vice president, ADM Investor Services, Chicago, told Milling & Baking News.

“We just don’t have enough,” he said.

Mr. Freed cautioned following a disappointing 2021 harvest, Canada was at risk of running out of hard red spring wheat, canola and oats before 2021-22 ends.

“We’ve never had that,” Mr. Freed observed. “And we’ve never had oats trade above $7 a bu.”

Meanwhile, the European Union was on pace to export 40 million tonnes of wheat in the current marketing year, but were it to do so, it would have ending stocks near zero.

“They are 50% ahead of their year-ago export pace, and they need to stop exporting wheat,” Mr. Freed said.

China is Europe’s No. 1 one wheat buyer, and China is buying mostly feed wheat. He added China may want to increase wheat imports “because they may have a feed grain problem.”

Russian wheat prices continued to escalate.

“It looks like the Russian domestic price of wheat is higher than the export price, so we’re going to see a pretty steep decline in Russia’s export wheat availability,” Mr. Freed said.

“Russian exporters have been front-loading wheat sales, which has hurt our market from a price standpoint, because they want to get wheat out before export quotas kick in,” Mr. Freed said. “If Russian domestic prices remain above the export price, they won’t need an export quota. The market will do it for them.”

Looking forward to Jan. 1, there may not be any European or Russian wheat available for export, Mr. Freed said.

“And with the US carryout below 600 million bus, we won’t have a lot extra wheat to sell to the world…We don’t have any wiggle room,” he said.

European perceptions were similar with European Matif milling wheat futures recently posting new contract highs in six of eight sessions and trading at the highest levels in 13 years.  

“In general, I think, wheat prices are so high because of tight supply, and I think they’re going higher,” Mr. Freed said.

He said some expected $8.50-a-bu wheat in KC and Chicago March or even December futures. Minneapolis spring wheat futures next point of resistance is $11 a bu.

“On top of that, we haven’t even traded the fact that we have a La Niña year, and it’s not supposed to rain in the hard red winter wheat belt next spring and summer,” Mr. Freed said. “North Dakota may get better rains because of La Niña, but right now, the northern Plains are dry.  And in Russia in La Niña years, winter wheat areas are dry.”