Canada Markets

In light of a continued push lower in nearby futures levels, basis for hard red spring on the prairies has been forced narrower as a combination of continued aggressive movement, downward pressure in the futures market, a lower Canadian dollar and a lack of producer selling has forced basis levels to narrow.

Basis levels south of the border are viewed as narrower than normal, where Tuesday's National Average Basis was reported at 28 cents under the September future, a level which is 37 cents stronger than the five-year average basis and just 3 cents weaker than the strongest basis reported over the past five years.

Today's average prairie-wide basis based on available Internet quotes is calculated at $.90/mt under the nearby September future, which results in an average price of $5.15/bu on the prairies based on today's close. Given Tuesday's bearish USDA report for wheat, nearby price may test psychological support at $6/bu, while the long-term continuous monthly chart would indicate further potential support slightly lower at $5.95 1/4. Below this level, chart support is lacking down to the $5.11 1/4/bu July 2010 low.

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

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