As we near the fourth quarter of the Canadian crop year (August-July), spring wheat futures are seen rising to new contract highs while basis levels are seen significantly stronger than the three-year average, as seen on the attached chart.
Recent analysis has shown that during the past five crop years, an average of 61.4% of total crop year wheat exports (excluding durum) are achieved as of week 36 Canadian Grain Commission licensed volumes reported, or the first 69% of the crop year.
Exports tend to be weighted to the latter months of the crop year. At the same time, there are signals that bears watching. Agriculture and Agri-Food Canada reduced its forecast for 2020-21 wheat exports by 50,000 metric tons this month to 21.050 million metric tons. As well, the West Coast Vessel lineup has fallen for the sixth time in seven weeks to a total of 23 vessels (Vancouver plus Prince Rupert), below the one-year average of 30 vessels per week.
Cash prices for No. 1 CWRS 13.5% across the nine regions of the Prairies as reported by pdqinfo on April 20 ranged from $286.23/mt to $307.31/mt, with all nine regions reaching the highest levels reported since the summer months of 2017. Across the nine regions, cash bids on Tuesday ranged from $29.89/mt to $45.03/mt below 2017 highs, averaging $36.14/mt, or close to $1/bushel below these highs.
Basis levels have shown some weakness in recent trade. While not shown, data for the Northern Alberta region shows the Canadian dollar basis as strong as $4.30/mt over the future as recent as April 7, while reported at $2.86/mt under the nearby May future on April 20, the strongest seen across the nine regions. At the same time, the attached chart shows this compares to the three-year average of $23.76/mt under the nearby contract for this date.
Cliff Jamieson can be reached at email@example.com
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