The weekly cash grain bid reported weekly by Saskatchewan Agriculture may be an early signal of what lies ahead for prairie wheat prices. As of Aug. 7, the government reports the average bid for No. 1 CWRS is $215.45/metric ton ($5.86/bushel), down $7.79/mt from the previous week.
As seen on the attached chart, this takes out the $217.87/mt low reported for the week of July 11, 2018 and is the lowest average bid reported since September 2016, or almost three years.
This weakness over the past week is despite a 1 1/2-cent rise in the September MGEX future, amd also despite the spot Canadian dollar that weakened two-thirds of a cent over this week, making Canada's wheat exports more competitive.
A glance at the USDA's track bids for Dark Northern Spring Wheat track Portland shows a modest strengthening on July 23, with No. 1 DNS track Portland at 75 to 80 cents over the September contract, while has since remained steady.
It's not that the industry is holding large stocks. While the Canadian Grain Commission's final week 52 Grain Statistics Weekly is not released at the time of writing, Week 51 commercial stocks of wheat were reported at 1.8875 million metric tons. This compares to the three-year average of 2.357 mmt, while is lower than the volume reported for all years checked in the past nine years.
Buyers are showing a growing comfort level with the pending harvest, while forecasts for the global market point to a well-supplied market and the likelihood of increased competition ahead.
A look at Saskatchewan Agriculture's historic data shows the cash bid falling from the first weekly bid reported in August to the last weekly bid in August, averaging $10.84/mt over the past five years, with losses reported for the month of August seen in each of the past five years. This could lead to further weakness ahead.
Over the August/September period, the cash bid fell in three of the past five years, averaging a loss of $5.67/mt over this period. By the end of October, prices rallied from the early August bid in four of the past five years, averaging a $7.19/mt gain.
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