Canada Markets

CAD Weakness Doing the Heavy Lifting in HRS Market

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Over the past week, price data from pdqinfo.ca for No. 1 CWRS 13.5% protein wheat fell from as little as $0.08/metric ton in western Manitoba to $2.32/mt in northeast Saskatchewan. This comes on a week where the May MGEX spring wheat contract closed 17 1/4 cents lower, which equates to $6.34/mt USD or $8.76/mt based on an average Canadian dollar/United States dollar exchange of $0.7237 for the week.

The Canadian dollar weakened 269 basis points over the past week, reaching its weakest trade against the USD in more than four years. This represents the largest one-week loss seen in the spot Canadian dollar since 310 basis points were shed over the week of Jan. 19, 2015.

A slightly longer-term perspective also shows how Canadian dollar weakness has acted to support cash bids. Since the May contract reached its recent high of $5.76/bu. on Jan. 22, this future has fallen $0.68/bushel USD to a March 13 close of $5.08/bu. This reflects a loss of $24.99/mt USD, while using the average spot Canadian dollar over this period, $33.34/mt CAD, which compares to the more modest cash losses across the Prairies as shown on the attached chart.

The basis against the May contract, calculated in CAD/mt, changed very little over this period, ranging from weakening $1.40/mt in eastern Manitoba to strengthening $1.46/mt in southeast Saskatchewan over this period. Canadian dollar weakness prevented more significant losses over this period, having weakened 428 basis points against the USD over the period.

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

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