The Good: The spread between Minneapolis and Chicago September wheat futures has widened considerably over the past three days. The spread has moved from 17 cents per bushel on Thursday to 47 cents per bushel at Thursday’s close. There are two reasons for the large increase in the spread since early May, when the spread was trading in the two to three cents per bushel discount range. The first reason is that the harvest is underway in the southern U.S. SRW wheat growing areas, while we are still two to three months away from spring wheat harvest. A more important reason is that protein levels are disappointing in the Kansas HRW crop. This has resulted in buyers putting a premium into the spring wheat futures market versus birth Chicago and Minneapolis wheat. A “normal” spread between Minneapolis and Chicago wheat is in the 60 to 70 cent per bushel range, so this spread will likely move higher in the coming weeks.
The Bad: Temperatures this week have been mostly below normal in the western Prairies and those cold temperatures moved into eastern Saskatchewan and Manitoba over the past two days. High temperatures today ranged from the low to mid teens. The cool temperatures are slowing crop development at a critical part of the growing season. The longest day of the year will occur on Saturday June 20th this year and temperatures in most areas of the Prairies will be below normal. Fortunately warmer temperatures will arrive by the middle of next week.
The Ugly: The number of new cases of COVID19 in the U.S. is on the rise again as the initial hot spots decline, while new outbreaks gain momentum. Texas reported 3,593 cases yesterday which is the second largest since the outbreak began in March. The number of cases in Texas today moved ahead of the number of Canadian infections today at 102,557. The increase in cases in Arizona, Texas and Florida are a big concern for the U.S.economy as this will likely set back the economic activity. Even if there are no stay at home orders, there will be a slow down in the recovery as people voluntarily stay at home. The chances for a quick recovery in the U.S. from the pandemic is looking less and less likely.