Kansas wheat futures had a volatile three months of price action this spring. Back in early April, September 2024 Kansas wheat futures traded as low as $5.67-1/2 a bushel on quiet market news. In addition, fund traders seemed to be content to hold on to their overall net short position in wheat futures.
Things started to change however on April 3, when September Kansas wheat futures posted a bullish key reversal on daily charts. This was, with hindsight, a technical clue that a price low was likely in place.
In the two months that followed, there were enough global weather hiccups that allowed a price rally in wheat to follow. September 2024 Kansas wheat futures traded as high as $7.60, with prices peaking on May 28, 2024. Nearly a $2 a bushel price rally in over two months!
Then, as quickly as the market rallied, prices then sold off, losing that $2 gain in just one month. As of this writing, September 2024 Kansas wheat futures are now trading back down near the April price lows.
From a marketing perspective
Will Kansas wheat prices rally again? Wheat futures may now again be at a bargain value for global end users. Total world wheat supplies remain historically tight with global ending stocks, according to the June 2024 World Agricultural Supplies and Demand Estimates report, coming in at 253.61 million metric tons for the 2024-25 crop year. This is down from 259.56 million metric tons in the 2023-24 crop year, and down from 271.04 million metric tons in the 2022-23 crop year.
Current global production numbers still stir controversy. Here in the United States, pre-report estimates for June 28 Planted Acreage report have all wheat planted acres at 47.657 million acres with 34.197 million of those winter wheat and 11.34 million spring wheat. This “all wheat” planted acreage number is down from nearly 50 million acres one year ago.
World weather continues to be threatening for the wheat crops in the Black Sea Region, as they are forecast to receive hot and dry weather in the coming months. The Russian wheat crop is now pegged at 83 million metric tons, according to the most recent U.S. Department of Agriculture report, down from 91.5 million metric tons in the 2023-24 crop year.
Also smaller, is the Ukraine wheat crop, coming in at 19.5 million metric tons on the most recent USDA report, down from 23 million metric tons one year ago. The country of India (third largest grower of wheat globally) has suffered three years of less than stellar wheat crops, which has left them with tight supplies.
With uncertainty regarding global supply of wheat, some global end users have already stepped up to secure wheat. The country of Norway recently announced that it would start stockpiling grain, specifically wheat, for the remainder of 2024 and 2025. That seems to be bucking the idea of “hand to mouth purchasing” and instead want food security for their people.
Prepare yourself
With global wheat demand remaining strong, and global supplies still on the tight side from a historical perspective, there may be more upside price potential for wheat in the coming weeks and months. Much of that final price response of course, is up to Mother Nature. Should a price rally occur, make a marketing strategy to capture pricing opportunities and minimize risk with the various marketing tools at your disposal.
If you have questions, you can reach Naomi at [email protected] or find her on twitter @naomiblohm.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. Total Farm Marketing refers to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency and an equal opportunity provider. A customer may have relationships with any of the three companies.
