Now that the Canadian Wheat Board, now known as CWB, no longer has a monopoly to market all the wheat grown in Western Canada, farmers are selling aggressively into the cash market.
“Without the wheat board, farmers aren’t limited in terms of delivery calls, so they can deliver as much as they want or as little as they want,” Jon Driedger, an analyst with FarmLink Marketing Solutions in Winnipeg, said. “So, in some cases farmers have been taking advantage of that flexibility and are delivering into the system quite heavily.”
Western Canadian producers have also been enticed to sell their wheat into the cash market because prices have been strong, Driedger said.
Cash prices for CWRS wheat in Western Canada reached levels as high as $8.67 per bushel as of Nov. 5, according to Prairie Ag Hotwire.
Cash market prices in Western Canada were strong, following the action seen in outside futures markets, primarily the Minneapolis Grain Exchange (MGEX).
“Even when the wheat board was in control, the MGEX was a relevant and important market to help us understand what spring wheat was valued at internationally and in the U.S.,” he said. “And, now it’s simply just applying that to the new system in western Canada.”
The advances seen in corn prices throughout the summer and a good chunk of the fall were also responsible for some of the price strength, Driedger said.
Strong domestic and export demand was also responsible for some of the price firmness.
“All the different grain companies are bidding for wheat,” he said. “And, some of them are being pretty aggressive in offering some attractive terms and programs.”
Driedger said it’s evident that export demand for Canadian wheat is strong, as there were recent reports that China was on the buying end of a big sale. He also said there is some talk in the market that China may still be looking to purchase more Canadian wheat.
Expectations that demand in the export sector will pick up even more because of production problems in other parts of the world, also helped prices stay firm.
“The former Soviet Union has been a very aggressive exporter of wheat in the past, but they had a smaller crop this year, so there’s a feeling that their supplies are running low,” Driedger said. “And, that is expected to direct more business to North America.”
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