While spring wheat crop problems in the past generally prompted buyers to adjust wheat mixes more heavily toward hard winter, that avenue is less attractive this year because of the unusually low protein content of the 2016 and 2017 hard winter crops. Cash premiums for the benchmark 12.2% hard winter climbed above 130c over the Kansas City September contract last week, up 50c from a year earlier. Compounding challenges for buyers still further, corn prices have held to year-ago levels, helping keep a lid on millfeed credits.
A plus in the transition to new crop has been a moderate-sized old crop spring wheat carryover, providing valuable cushion given the current market uncertainties. Additionally, spring wheat crop analysts noted the possibility of meaningful improvement in yield prospects if July crop conditions rally. Still, such an outcome is anything but guaranteed. Together with close cooperation with flour suppliers, a considered, cautious course of action for bakers is required in the perilous current environment.