Spring Wheat continues to lead wheat lower.  There are strong indications that the domestic spring wheat crop will come in above 550 million bushels.  This, of course, remains to be seen, but do not rule it out.  Buyers continue to hold the cards.

Expect to see a lot of progress made in the Spring Wheat harvest as temps have warmed and the crop is reaching maturation.  As of Sunday the harvest stood at 38% complete.  I would not be surprised to see the Spring Wheat harvest at 60% plus, completed, come Monday afternoon.  That’s real good progress for this time of the year.  Producers continue to find excellent yields and good test weights, however,  protein content is low on most of this crop.  That was expected, given the ideal growing conditions, but expecting it and knowing how to handle it are too different issues.  I expect to see a large share of these lower proteins marketed this fall even though discounts are high.  I do not see any reason to keep low protein Spring Wheat around.  Spring Wheat must have 13% or higher protein to be delivered on the futures contract.  The Dec contract may be the best opportunity to sell 13% protein wheat.  I believe 13.5% and higher proteins will hold some value into the spring.  Based on what I have been hearing about protein levels to this point, 14% and higher protein should hold a lot value into the spring.

We need to find someone to use this large, low protein Spring Wheat crop.  I have to believe that we need to put a higher percentage of this crop into the domestic flour.  The only way to do this is to make it cheaper than using Hard Red Winter.  It appears the Spring Wheat futures may move to a discount to Hard Red Winter Wheat futures.  That, in conjunction with low protein discounts, would be the first step towards increasing domestic use of Spring Wheat.  Expect the routine buyers on the export market to continue to buy 13.5% and 14% protein wheat.   Whether they do so or not, there is going to be a market for that quality to wheat.

The talk of the possibility of a frost in the Mid-West was re-introduced mid day.  It appears these ideas call for the possibility of a killing frost two weeks out.  Some models allude to the possibility and it should not be ruled out.  While a killing frost would cause major damage to Corn and Bean production, the Domestic Spring Wheat crop is mature and the majority of it should be harvested before this event would take place.  Canada is a different story.  Warm temps have helped the maturation process in Canada, but some areas need a considerable amount of time to reach full maturity.

Expect Wheat to remain under pressure.  Although I believe the market is going to work lower, I would not press the futures near these levels.

If you have any questions or comments about this article, please contact Brian at 1.877.377.7905 or email him at brian.henry@archerfinancials.com .

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