MarketsFarm — A roller-coaster type of week for grain markets, fuelled by the ongoing conflict between Ukraine and Russia, ended with slightly higher bids for western Canadian wheat for the week ended Thursday.
As optimism grew over the renewal of Russia’s agreement to allow Ukrainian grain shipments on the Black Sea, wheat futures on the Chicago Board of Trade (CBOT) surged higher on Nov. 15 when news broke of a rocket landing in a Polish village near the Ukrainian border, killing two people. It was later determined the next day that the projectile was part of Ukraine’s defence system, not from Russia, and in turn, wheat prices fell back to levels before the incident.
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U.S. wheat futures closed higher on Thursday on concerns over the limited availability of supplies for export in Russia, analysts said.
The agreement was extended Thursday by 120 days, putting more pressure on wheat futures. Poor export numbers for U.S. wheat and a stronger Canadian dollar also negatively affected prices. However, dry conditions in the U.S. and Argentina, rains in Australia, and the International Grains Council (IGC) cutting its 2022-23 wheat ending stocks by four million tonnes to 282 million in its monthly supply/demand report supported prices.
Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices increased by between 20 cents and $1.80 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $420.90/tonne in southeastern Saskatchewan and $443.90 in southern Alberta.
Quoted basis levels ranged from $70.40 to $93.40/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$315.30 to US$332.50 per tonne. Currency-adjusted basis levels ranged from US$18 to US$35.20 below the futures. If the futures were converted to Canadian dollars, basis levels would be $13.50-$26.30 below the futures.
Average Canada Prairie Spring Red (CPSR, 11.5 per cent protein) prices were also higher, up by between 10 cents and $3.50/tonne. The lowest average bid for CPSR wheat was $400.70/tonne in southeastern Saskatchewan; the highest was $422 in northern Alberta.
Meanwhile, average Canada Western Amber Durum (CWAD) prices were down by between 50 cents and $2.80/tonne with bids ranging from $496.90 in southeastern Saskatchewan to $503 in western Manitoba.
The December spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted Thursday at US$9.5375 per bushel, 15.5 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 at US$9.38/bu., up eight U.S. cents.
The December Chicago Board of Trade wheat contract gained 0.25 of a U.S. cent from the previous week to close Thursday at US$8.0675/bu.
The Canadian dollar gained 0.73 of a U.S. cent to close at 74.91 U.S. cents U.S. on Thursday.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
