(Resource News International) — Spring wheat prices in North Dakota are
currently bid at prices considerably higher than those available
to nearby producers in Manitoba, according to an analyst who thought the price difference was too large.
However, a Canadian
Wheat Board official said a number of risk factors are taken into
account in determining the CWB’s daily price contracts.
Canadian farmers typically sell the bulk of their wheat
through the CWB’s pool accounts, which provide growers with an
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the year. However, in recent years a number of other pricing
options have become available, including Daily Price Contracts
(DPCs) which are designed to reflect the U.S. spot market.
Mike Jubinville, a market analyst with ProFarmer Canada,
said the daily price contract is intended to be in a direct
relationship with U.S. spot prices, as it reflects an average of U.S.
elevator prices. However, he thought the current price
differential between elevator bids in North Dakota, and what
farmers a few miles north of the border in Manitoba could get for
their wheat if they used a CWB daily price contract, was too
large.
North Dakota elevators are currently offering spot bids for
hard red spring wheat of US$10.27 to US$10.95. Factoring in
freight and other deductions, Jubinville said the direct price
contracts from the CWB are about a dollar cheaper for Manitoba
farmers. “I don’t know what points they’re using, but they’re
sure not the ones I’m looking at,” he said.
Jeff Pleskach, marketing manager with the CWB’s sales policy
and planning department, said the DPC is meant to reflect what’s
happening with northern-tier U.S. elevators. “We try and reflect
that as accurately as we can to a delivery point in Canada.”
However, he added that there are a number of risk factors at
play that lead to adjustments to the prices seen in Canada.
in Canada compared to the U.S. He said U.S. elevators usually take a
margin of $3 to $7 per tonne, while handling costs in Canada are in
the $12 to $13 per tonne range. Rail movement in the U.S. is also a
lot cheaper than it is in Canada, said Pleskach.
Pleskach also pointed out that while a US elevator may put
out a price every day, there’s no guarantee that they have to buy
that grain. “We can’t do that here,” he said explaining that
while the grain may be priced through the DPC, it will all be
sold through the pool in the end.
In related news, the CWB is expected to release pricing
options for malt barley that follow the spot market, similar to
the DPCs currently available for wheat, early in the new year.
Details on the new malt barley pricing options are not yet
available.
