MarketsFarm — A rising Canadian dollar helped lower western Canadian wheat bids for the week ended Thursday despite an array of supportive factors.
As the central and southern U.S. Plains deal with severe drought in winter wheat-growing areas, a large snowpack in the northern Plains threatens to delay spring wheat seeding by a few weeks. The runoff from the snowpack is also creating flood concerns along the Red River Valley in both Manitoba and the U.S.
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Another supportive factor is Russia announcing it’s not interested in extending the United Nations-brokered Black Sea Grain Initiative past May 18 unless trade obstacles are removed.
Meanwhile, the U.S. Department of Agriculture increased its 2022-23 wheat carryout projection by 30 million bushels to 598 million in its monthly supply/demand report on Tuesday, at the high end of trade expectations. However, world wheat carryout went down by 2.15 million tonnes at 265.05 million.
U.S. wheat exports for the week ended March 30, including durum, were only 197,700 tonnes. By comparison, Canadian wheat exports for the week ended Apr. 2 were 477,600 tonnes.
CWRS (Canada Western Red Spring) wheat prices lost $13-$16.70 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $371.80 per tonne in southeastern Saskatchewan and $391.70 in southern Alberta.
Quoted basis levels ranged from $59.60 to $79.50 per 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$278.30 to US$293.20/tonne. Currency-adjusted basis levels ranged from US$18.90 to US$33.80 below the futures. If the futures were converted to Canadian dollars, basis levels would be $14.20-$25.30 below the futures.
Meanwhile, CPSR (Canada Prairie Spring Red) prices were also lower, down $17.80-$19.60 per tonne. The lowest average bid for CPSR wheat was $354.50 per tonne in southeastern Saskatchewan, while the highest average bid was $375.20 in southern Alberta.
Average durum prices also slid down $4-$8.10 per tonne, with bids between $437.40 in northeastern Saskatchewan and $447.50 in southern Alberta.
The May spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted at US$8.495 per bushel on Thursday, 24 U.S. cents lower than the previous week.
Kansas City hard red winter wheat futures, traded in Chicago, are more closely linked to CPSR in Canada. The May K.C. wheat contract was quoted at US$8.4525/bu., down 16.25 U.S. cents.
The May CBOT wheat contract lost 15 U.S. cents from the previous week, ending at US$6.67/bu. on Thursday.
The Canadian dollar was stronger, rising 0.55 of a U.S. cent to close Thursday at 74.86 cents U.S.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
