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WMR-HRS Values Strengthen

by Jim Peterson

Break Date: 6/6/2017 2:55:00 PM
Last Edit: 6/6/2017 2:57:40 PM

As the 2017 marketing year began on June 1, values for HRS are showing strength, pushing through resistance levels, and toward contract highs in the futures market. Concerns by domestic millers over a second straight year of below average protein in the hard red winter crop, lower planted acres of HRS and a very dry start to the growing season are all factors combining to build buying interest in Minneapolis futures.

The chart below shows price trends in the major wheat futures markets in the U.S. since June of 2015. In 2016, a notable premium developed for the HRS class due to increased domestic mill demand, and strong international demand due to a shortage of protein, quality wheat. Many analysts anticipated this premium to narrow in the 2017 marketing year, but in recent weeks, the premium looks to be trending even higher.

Early harvest results from hard red winter harvest are confirming lower protein levels, driving domestic mill demand for mid to higher protein HRS supplies for blending. If rain continues to miss the key HRS growing region, values for spring wheat will need to move even higher to ration supplies.

The final production and protein profile of the 2017 U.S. HRS and Canadian spring wheat crops will be the most important variables in determining the extent of market premiums for protein within the HRS class, but the initial outlook is promising. Hopefully the HRS region will also enjoy some improvement in rainfall patterns to garner some production to market into the higher trending market.