Wheat markets dropped to their loss limit the day after a major jump following Russia’s announcement that it plans to suspend wheat exports.
According to a report from Winnipeg by the Reuters news service, Chicago Board of Trade (CBOT) September wheat dropped its limit-down US60 cents Friday, a slip of over seven per cent the day after finishing limit-up.
“It makes sense if you get up as much as you did on the overnight market, you better start taking some profits,” grain analyst Tim Hannagan of U.S. trading firm PFGBest told Reuters’ Rod Nickel.
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All three U.S. commodity exchanges have expanded trading limits to 90 cents for Monday, Nickel reported.
He also quoted Hannagan as saying any further rally in wheat will need to rely on fresh news, such as any seeding problems in Russian winter wheat acres next month if that country’s drought continues.
Joe Bedore, CBOT floor manager for trade house FCStone, was quoted by Reuters as saying the Russian government’s statements Friday that it will honour its current contracts and reconsider its export ban after harvest “takes a little pressure off these markets.”
The news comes the day after the Canadian Wheat Board issued a notice urging Prairie wheat growers to consider their “potential pricing opportunities” as Russia’s wheat yield picture became clearer.
That said, the CWB warned at the time, markets are “highly volatile” and may move up or down very quickly in a short period of time. Russia’s situation alone might not be enough to sustain the rally seen in wheat futures, the board said.
“In order to sustain current futures levels, unanticipated demand will likely need to emerge — whether from corn or additional wheat crop problems in Argentina or Australia,” the CWB said.
“In the interim, wheat futures could begin to be subjected to downward pressure as the North American spring wheat harvest commences.”
“Stuck on island”
The Western Canadian Wheat Growers Association, a well-known opponent of the CWB’s single marketing desk for Prairie wheat and barley, on Friday blamed the board’s export monopoly for Prairie growers “missing out on the full benefits of the recent run-up in wheat prices.”
“Farmers in Ontario, Australia and everywhere else in the world have the opportunity to cash in on this rally,” Stephen Vandervalk, the Wheat Growers’ Alberta vice-president, said in a release Friday afternoon.
“Only in Western Canada are we stuck on an island of low prices,” said Vandervalk, who farms at Fort Macleod, Alta.
The best price offered by the CWB to Prairie farmers Thursday for its Canada Western Red Spring wheat class was $287.37 per tonne under the board’s FlexPro program, which works out to C$6.23 per bushel, basis Saskatchewan, the Wheat Growers said.
The “typical” price at elevators in the northern U.S. yesterday for comparable wheat was US$6.72 (C$6.83) per bushel, the group said.
