Canada Markets

While Prairie producers struggle to deliver any wheat prior to the June through August period, wheat quotations reported to Agriculture and Agri-Food Canada by the exporters continues to trend higher.

The most recent report of export quotations for Canadian wheat off the West Coast shows 2 CPS 11% protein wheat offered at $331.46/mt as of Feb. 21, up from a low of $280.23/mt reached in mid-September. This is shown by the blue line on the attached chart.

The green line represents the 1 CWRS 13.5% protein quotation, which has improved from a low of $296.86 in September to a recent quote of $347.62/mt as of Feb. 21.

Of interest is the spread between the two, which started the crop year with CWRS offered at a $30 to $32/mt premium to CPS, while early February saw the lower quality CPS offered at a marginal premium, according to the data provided. Premiums have since widened, with CWRS quoted at a $16.16/mt premium to CPS. As CWRS trades against the Minneapolis exchange and CPS trades against the Kansas City HRW exchange, spreads may vary given the relative trade in these two classes of wheat.

Futures prices have rallied in recent weeks, increasing the export quotes, while Canada's quotes have also rallied due to Canadian dollar weakness. Chances also exist that export quotes are inflated due to the industry's inability to put stocks into export position due to freight issues, while also accounting for some level of expected demurrage costs incurred while clearing inventory.

Also of interest is the trend of the 2013/14 export quotes, while recently trading above the super-imposed year-ago 2012/13 levels, as shown on the upper two lines, purple indicating the 2012/13 CWRS quotation and red being the 2012/13 CPS quote. This would suggest better opportunities exist than year-ago levels for the first time this year, if only the market could be accessed.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

(ES)

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