Prairie spring wheat bids are facing pressure as we near the end of the crop year, with several regions of the Prairies showing cash bids for No. 1 CWRS 13.5% protein as reported by pdqinfo.ca showing 2020 lows reached this week.
Despite futures being historically weak, we remain well within a period of seasonal weakness. DTN reports last week's close on the Sept. future at $5.15 1/4/bushel at the 9th percentile of the five-year range, while also stating that spring wheat's seasonal move is weak overall, but the tendency is for a peak in futures in late May while a bottom is normally reached in late September.
The continuous active chart shows a January high of $5.67 3/4/bushel (bu), reached in the week of Jan. 21 on the March chart. Prices have faced pressure since, with support seen at the $5/bu level across several contracts. The nearby September contract closed higher on Wednesday to land at $5.11/bu.
A July rally saw cash bids reported across the nine regions of the prairies monitored by pdqinfo.ca come close to crop year highs during the month. This ranges from being $0.19/metric ton under the crop year high in the Peace River Region of Alberta, to as wide as $8.58/mt below the crop year high in eastern Manitoba.
The three regions reported for Alberta saw a July high that averaged $2.42/mt below the crop year high, while the average of the four regions of Saskatchewan fell $3.44/mt below the high and the two regions of Manitoba reached an average of $8.06/mt below the crop year high.
Prices have corrected sharply lower since, with this week's low ranging from $14.91/mt to $17.61/mt below the July high. Of the nine regions reported, six reached fresh lows for 2020, or the lowest cash bid levels seen since December.
In U.S. dollar terms, the nearby Sept. contract lost $7.35/mt USD over this period, while in Canadian dollar terms this equates to a future that has lost $14.44/mt, due to the Canadian dollar strengthening 1.25 cents against the USD since the July highs were reached.
As the declining future fails to explain all of the cash market weakness this month, this move was also accompanied by a weaker cash basis.
This may seem like a sudden correction in prices at a time when there remains an above-average number of vessels on the West Coast lineup, although the first crop report released this week from Manitoba indicates some spring cereals are starting to turn, so new-crop harvest is around the corner and easing concerns on the part of buyers.
Cliff Jamieson can be reached at email@example.com
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