The spread or difference between Minneapolis spring wheat futures and the winter contract traded in Kansas City likely will remain volatile after the detection this year of higher-than-usual levels of vomitoxin in the spring wheat harvest, industry sources said.
"The early harvest in the eastern part of the region has had some elevated levels of vomitoxin. I've heard of a lot of it ranging between 2 and 4 parts per million (ppm)," said Jim Peterson, marketing director for the North Dakota Wheat Commission, Bismarck, North Dakota.
The MGE new-crop September spring wheat contract has fallen over 18 cents per bushel relative to KCBT September since late June. On June 21, MGE was at a 14 cents premium and by Friday the contract had plunged to a 4-1/2 cents discount.
Spring wheat farmers in the US Northern Plains, especially in top producer North Dakota, saw their crop hit by excessive wet weather when it was forming heads, a scenario that often leads to an outbreak of head scab fungus, which is the precursor of vomitoxin. High levels of vomitoxin in livestock or human food can cause nausea.
As of Monday, the US spring wheat harvest was 42 percent complete and farmers this week have been battling occasional showers in parts of the harvest region that has kept them from combining or selling the crop.
Regardless of harvest progress, many spring wheat producers aren't selling their crop anyway because of the uncertainty surrounding the vomitoxin issue.
"What's happened is a lot of producers aren't selling, even the producers with good wheat aren't selling so there's going to be this tug of war in the market," Peterson said.
The MGE doesn't not have a delivery specification for wheat that contains vomitoxin, which could encourage heavy deliveries on the September contract adding further pressure to MGE September relative to KCBT September.
First notice day for deliveries on the September contract is Wednesday, August 31.
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