MarketsFarm — A larger-than-expected cut in the U.S. Department of Agriculture’s (USDA) latest supply and demand forecast, plus rising wheat futures in anticipation of tighter worldwide supply, led to higher bids for western Canadian wheat for the week ended Thursday.
USDA on Tuesday trimmed world wheat ending stocks to 275.8 million tonnes, down 1.38 million from October’s report, with the biggest drops in production coming from the European Union and the United Kingdom.
USDA also projected a 14-year low in U.S. wheat supplies and reported the country’s winter wheat crop was rated 45 per cent good to excellent.
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Russia’s plans to change its wheat export tax formula and implement an export quota by mid-February also affected prices.
Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices were up $20.30-$23.60 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $449.20 in southeastern Saskatchewan and $468.40 in northern Alberta.
Quoted basis levels ranged from between $62.20 and $81.40 above the futures when using the grain company methodology of quoting the basis as the difference between U.S. dollar-denominated futures and Canadian dollar cash bids.
Accounting for exchange rates and adjusting Canadian prices to U.S. dollars, CWRS bids were from US$360.70 to US$376.20 per tonne. Currency-adjusted basis levels ranged from US$10.80 to US$26.30 below the futures. If the futures were converted to Canadian dollars, basis levels would be $8.70-$21.10 below the futures.
Average Canada Prairie Spring Red (CPSR, 11.5 per cent protein) prices rose $18.40-$30.20 per tonne. The lowest average bid for CPSR wheat was $410 in southwestern Saskatchewan, while the highest average bid was $418.60 in southeastern Saskatchewan.
Average Canada Western Amber Durum (CWAD) prices rose by between 50 cents and $2.40 per tonne, with bids ranging from $732.60 in northwestern Saskatchewan to $755.70 in northeastern Saskatchewan.
The December spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted at US$10.555 per bushel on Thursday, 38.5 U.S. cents higher than the previous week.
Kansas City hard red winter wheat futures, traded in Chicago, are more closely linked to CPSR in Canada. The December K.C. wheat contract was quoted Thursday at US$8.2925, up 43.25 U.S. cents.
The December Chicago Board of Trade wheat contract gained 39.75 U.S. cents from the previous week, at US$8.125 on Thursday.
The Canadian dollar lost 0.02 U.S. cent from the previous week, to close Wednesday at 80.31 U.S. cents.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
