Reports of strengthening basis and cash prices reported in the U.S. Midwest are also seen in Ontario as the market juggles the uncertainty surrounding seeded acres on both sides of the Canada-United States border while focusing on the late-planted crop and the need for ideal weather ahead.
DTN's National Average Basis was reported at $0.10 under the September contract at Thursday's close, the strongest basis seen over the past five years, while this week's Market Matters Blog on DTN points to cash prices in the eastern Midwest with cash prices shown from $0.10 to $0.65 over the September contract. As seen in morning cash trade, an eastern Midwest ethanol plant was bidding as high as $5.23 per bushel (bu) for immediate delivery over the next week.
Prices are lower in the western side of the U.S. Midwest, with discussion already arising over the possibility of moving grain from west to east and the costs of such a move.
Grain is undoubtedly in tight hands on both sides of the border, with hotter and drier weather in the U.S. forecast over the next 10 days may add further fuel to the fire. The same may hold true for Ontario, with DTN's five-day highs compared to normal pointing to highs ranging from 0-3 degrees Celsius above normal, while areas of the U.S. may see temperatures range from 4-6 C above normal, with DTN's Market Weather Factors viewed as bullish for row crops.
As of Thursday's close, the cash price for this randomly chosen location in Ontario was $6.03/bu CAD, while higher prices existed and pushed even higher on Friday given a 10-cent move higher in the nearby September contract. This is the strongest cash trade seen since July 2013, and despite Canadian dollar strength realized this week. It is also despite ample old-crop supplies, with the current AAFC estimate for 2018-19 ending stocks at 2.2 million metric tons (mmt), which is higher than the five-year average of 2.032 mmt and the 10-year average of 1.790 mmt.
The province of Ontario will be looking south for imports but will be looking at states that are already showing the most aggressive pricing and monitoring both late crops and rated at the lowest condition ratings seen in the weekly USDA Crop Progress report.
So what lies ahead? Seeded acres on both sides of the border remain a mystery, with USDA to update their estimates in mid-August. Statistics Canada will also likely make revisions in their Aug. 28 Production of Principal Field Crops report, with early private estimates indicating that several hundred thousand acres were not seeded in Ontario due to wet conditions, which could lead to the smallest seeded acreage in over 10 years in the province.
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Cliff Jamieson can be reached at email@example.com
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