Winter Wheat Markets Have Flipped the Script | Presented by CME Group

Market Dynamics - US winter wheat markets have experienced a reversal, with Kansas City hard red winter wheat futures trading at a discount to Chicago wheat futures since mid-August [1] - This inversion is driven by supply and quality factors [2] - High hard red winter wheat yields and late-season moisture have lowered protein levels across the hard red winter wheat crop [2] - The abundance of lower quality supply has weighed down the Kansas City hard red winter wheat futures contract price, which requires a minimum 11% protein [3] - Soft red winter wheat maintains a higher value due to its fundamentally lower stocks to use ratio [3] Historical Context - Past inversions include a soft red winter wheat supply crunch from 2019 to late 2021 and the Russian invasion of Ukraine in February 2022 [4] Commodity Pricing - Quality specifications, particularly protein content, can temporarily overpower typical supply-side dynamics in commodity pricing [5]