Soft Wheat Facing Marketing Challenges

Worldwide, there is a shortage of hard wheat, but it appears there will be plenty of soft wheat to more than meet demand.

Some wheat growers are facing a new set of challenges at harvest time. Hard red winter wheat, grown in the Great Plains and used for bread flour, is in decreasing supply. Soft red winter wheat, used for pastries, is in plentiful supply, according to a USDA report.

Wheat growers hearing reports of a drop in wheat production might falsely assume better prices ahead, says Melvin Brees, crop analyst at the University of Missouri Food and Agricultural Policy Research Institute.

"There is mixed news," Brees says. "The positive news is for hard red winter wheat; but the negative news is for soft red winter wheat.

"Hard red winter wheat production is down 29% this year. However, soft red winter wheat is up 16%. Worldwide, there is a shortage of hard wheat, but it appears there will be plenty of soft wheat to more than meet demand."

Difference shows up in price offerings

July futures contracts for soft red winter wheat closed at just over $3.73 on the Monday after the June 9 USDA crop report. The July futures for hard red winter wheat closed at almost $4.50.

"This is rather unique," Brees says. "There is a tightening of wheat supplies, except for soft red wheat which has increasing supplies."

Hard wheat is traded on the Kansas City Board of Trade. Soft wheat is traded on the Chicago Board of Trade.

"I expect to see the price spread between Chicago and Kansas City futures to continue," Brees says. "There is nothing in the outlook to suggest an improvement."
TAGS: USDA
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