MarketsFarm — Wheat futures on the Chicago Board of Trade (CBOT) hit multi-month lows, which put pressure on Western Canadian wheat bids, during the week ended Thursday.
Despite tighter wheat supplies in the U.S. and worldwide compared to last year, as well as the ongoing Russian invasion of Ukraine, wheat futures reached depths which weren’t seen for months.
On Dec. 5, the March Minneapolis spring wheat contract declined to US$9.04 per bushel, its lowest price since Sept. 8. The next day, the March Kansas City hard red wheat contract dipped to US$8.2175/bu., the lowest price since Aug. 19, while the March Chicago wheat contract fell to US$7.235/bu. for the first time since Oct. 12, 2021.
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The recent weakness in wheat prices can be attributed to a lesser amount of U.S. wheat exports. Net weekly U.S. wheat export sales as of Dec. 1 were 189,900 tonnes near the lower end of trade expectations ranging from 150,000 to 350,000 tonnes. Expectations of a record wheat crop in Australia at 36.6 million tonnes, despite quality concerns, as well as Russian wheat supplies threaten to lessen the demand for U.S. wheat.
Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices declined $6.50 to $8.40 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $410.40/tonne in northeastern Saskatchewan and $432.50 in northern Alberta.
Quoted basis levels ranged from $76.20 to $98.30/tonne 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$302.20 to US$318.50 per tonne. Currency-adjusted basis levels ranged from US$15.70 to US$32 below the futures. If the futures were converted to Canadian dollars, basis levels would be $11.60-$23.60 below the futures.
Average Canada Prairie Spring Red (CPSR, 11.5 per cent protein) prices were also lower, down $11-$13.90/tonne. The lowest average bid for CPSR wheat was $387.70/tonne in southeastern Saskatchewan, while the highest average bid was $408.80 in northern Alberta.
Meanwhile, average Canada Western Amber Durum (CWAD) prices were up $2.30-$4.10/tonne, with bids ranging from $487.70 in northeastern Saskatchewan to $498.40 in southern Alberta.
The March spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted Thursday at US$9.095 per bushel, 28.5 U.S. cents lower than the previous week.
K.C. hard red winter wheat futures, traded in Chicago, are more closely linked to CPSR in Canada. The March K.C. wheat contract was quoted Thursday at US$8.4475/bu., down 45.5 U.S. cents.
The March Chicago Board of Trade wheat contract lost 36.75 U.S. cents from the previous week, closing Thursday at US$7.4625/bu.
The Canadian dollar dropped 0.81 of a U.S. cent to close at 73.63 U.S. cents on Thursday.
