KANSAS CITY, MISSOURI, US — The absence of an export program to the Texas Gulf as an outlet following the harvest of a large hard red winter wheat crop has sharply depressed the Kansas City spot basis.

Hard red winter wheat with 12.2% protein was quoted Sept. 20 with a high side of 80¢ over the Kansas City December future, which compares with 101¢ over December on Sept. 22, 2023; 152¢ over December on Sept. 23, 2022; and 156¢ over December on Sept. 24, 2021.

“We had a bigger wheat crop than people expected,” said Mike O’Dea, risk management consultant, StoneX, Kansas City. “We had to move a lot more wheat out because of the size of the fall crop coming. People that normally would have some extra sales on the books didn’t, so they had to move wheat, and it’s just driven the spot price down.”  

Rail freight has been a mixed bag for the industry. Rail car placements at origin have been timely for most of the summer. That has kept shippers busy loading wheat and applying it against contracts at a rapid rate that has filled and at times overwhelmed millers’ wheat pipelines, lessening buyers’ reliance on the KC spot market to source supplies. Some millers this summer sought relief from pluggy pipelines by seeking delays in the application of wheat on contract.

At the same time, rail freight prices have shot higher in recent months. Traders report secondary market prices at $700 per car over tariff for singles, while one car among 110 on a shuttle train was being bid $1,500 over tariff on $2,000-over-tariff offers. For several months, the BNSF and Union Pacific railroads have experienced lengthy delays in rail car movement to and from Mexico. That’s keeping secondary shuttle freight values elevated and partly influencing the lack of an export market for hard red winter wheat, O’Dea said.

“The big thing is a lack of a Gulf program,” he said. “If we had a Gulf wheat program, we could probably see these basis values a little stronger because of additional demand for this wheat that’s trying to move. That’s the biggest reason for domestic wheat being so cheap.”

While the KC spot basis was cheap, flat prices were not far off from historical levels,” O’Dea said.

“Futures are a little elevated now after dropping down to 5¼¢ a bushel a couple weeks ago,” he said. “What’s hurting the export side is we’re overvalued on the futures market versus the global cash market. The other thing is this mess with the railroads, so you’ve got shuttle freight elevated. That’s hurting the export side, too.”

The Minneapolis spring wheat basis has shown volatility in recent weeks at higher proteins as mills pressed for more 14%- and 15%-protein supplies. With about 5% of the crop left to harvest, and with 339 of an expected 451 samples lab tested, spring wheat averaged 14.1% protein, which compared with 14% a week earlier, 14.2% in 2023 and 14.5% as the five-year average protein.