As of March 17, cash prices for No. 1 CWRS 13.5% spring wheat ranged from $263.28/metric ton in western Manitoba to $288.27/mt in northern Alberta according to Pdqinfo.ca's daily price data.
Cash bids reported for March 17 are down $8.20/metric ton to $13.01/mt CAD from the Feb. 24 highs across the nine regions of the Prairies reported by pdqinfo.ca. The average drop is $11.23/mt.
There is carry seen in the old-crop trade, with bids reported for July delivery ranging from $5.80/mt to $7.74/mt higher than the spot bids. Last Friday's close saw the May/July futures spread close at minus 8 cents, viewed as a bearish level of carry, while this spread has weakened modestly to minus 8 cents on March 18, a return to last week's close. Last week's close also fell to the 40th percentile of the five-year range for that particular week, continuing to signal weakness relative to past years.
One important signal for prairie farmers is the old-crop/new-crop inverse seen in prairie bids. The brown bar on the attached chart signals the March 17 futures close which indicated a 13-cent/bushel (bu) carry in the July/December MGEX futures spread, with July closing at $6.40 1/2 USD and the December contract closing at $6.53 1/2/bu.
The forward curve for spring wheat signals a bearish market overall, with each consecutive future closing higher than the one prior through to the May 2022 contract. The July/Dec spread at minus 13 cents compares to the five-year average of minus 19 3/4 cents for this date, signaling a less-bearish view of fundamentals than seen on this date in recent years.
Canadian cash bids are currently defying this carry, with bids for July inverted or higher than reported by pdq for October delivery. As seen by the blue bars of the attached chart, this inverse ranges from $24.99/mt for northeast Saskatchewan on March 17 to $10.52/mt in eastern Manitoba. Here, the market is signaling front-end demand, with buyers wanting deliveries now as opposed to later. This is most apparent for Saskatchewan and Alberta bids, signaling West Coast movement.
It should also be noted that this inverse has weakened modestly. Since Feb. 24 when prairie cash prices reached their highest level according to daily pdq price data, this inverse reported across the three regions of Alberta has weakened from $2.40/mt to $2.50/mt.
This scenario may spell opportunity for producers selling into this market while this inverse exists.
Cliff Jamieson can be reached at email@example.com
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