Canadian cash bid data may be always viewed with a degree of skepticism, given the nature of the Canadian grain trade, while perhaps even more so in times such as now when demand is high and stocks are tight.
According to pdqinfo.ca price data, old-crop basis continues to weaken. On Jan. 31, the March contract dropped by $4.40/metric ton (mt), while cash bids fell from $6.33/mt in pdq's Eastern Manitoba region to $13.29 in the Northwest Saskatchewan region. Among the largest price declines were the Alberta regions, closest to West Coast ports.
The brown bars on the attached chart represents the move from the most attractive basis reached in November to Jan. 31, showing basis weakening from $51.88/mt in Eastern Manitoba to $64.83/mt in Northeast Saskatchewan. Buyers are signaling a waning interest in front-end deliveries at a time when futures are struggling to keep pace with gains realized across the soy complex.
There exists stronger basis in May delivery (not shown), which is reported to range from $5.25/mt under the May contract in the Northern Alberta region to $26.10/mt under in Southeast Saskatchewan, although the March/May inverse of $12.10/mt at the time of writing acts to reduce potential gains of holding into spring.
The grey bars represent the new-crop basis for November delivery for the nine regions of the Prairies. New-crop basis is clearly stronger although is not signaling signs of panic. Unlike the spot basis, new-crop basis as of Jan. 31 has strengthened from $7.13/mt to $11.87/mt across the nine regions since its weakest basis was reported during January.
Strengthening new-crop basis is seen at a time when the new-crop November future reached a fresh contract high this session, up $7/metric ton, to $843.40/mt.
Cliff Jamieson can be reached at email@example.com
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