So far this month, the September MGEX spring wheat contract has posted a gain of 50 1/2 cents, while the December contract has gained 48 1/2 cents. These moves are counter to the normal seasonal moves, which would typically see wheat prices reach seasonal highs in early July only to drift lower into December. DTN notes this seasonal trend not only for spring wheat, but also for hard red winter and soft red winter wheat.
One only has to go back to the summer of 2017 when a drought in the Northern states and southern prairies drove the December MGEX spring wheat contract from a June close of $7.59 3/4 per bushel (bu) to a July high of $8.43/bu, only to end the month of July at $7.44 1/4, down 15 1/2 cents/bu. Consecutive monthly losses were also seen each month from August through December trade.
The attached chart shows that, over the past 10 years, the December contract has closed lower in July followed by a further loss in August in six of the 10 years. This has been the case in each of the past three years, while over the 10-year period, the December contract has averaged a 2 1/2-cent loss in July and a 16-cent loss in August as harvest activity increases.
This year could be different, with production challenges faced in several major growing areas of the world. Futures spreads would suggest that commercial buying in spring wheat is contributing to the move higher at present, although this bears watching.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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