Canada Markets

Prairie HRS Basis Signals Demand

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Despite a forecast for the second-highest global carryout of wheat on record forecast for the current crop year, the prairie basis for No. 1 CWRS 13.5% (blue bars) remains much stronger than normal (brown bars) as futures also show strength. (DTN graphic by Cliff Jamieson)

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

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