It's perhaps difficult to reach conclusions on producer behavior as it relates to deliveries of wheat this crop year. First of all, the deregulation of the wheat market will have an impact on the producer's ability to deliver product when they choose. For this reason alone, grain delivery patterns have the potential to deviate from historical patterns.
At the same time, this summer's $3 per bushel or 40% gain in MGEX spring wheat futures from the June low of $7.37 1/4/bu. to the July high of $10.34/bu., created pricing opportunities which may also have resulted in increased deliveries. Even with the current setback in wheat prices, wheat continues to be priced in the upper 19% of pricing opportunities seen in the past five years as of the most recent data.
In their bid to entice deliveries into the CWB Harvest Pool, with the sign-up extended until Friday, Nov. 9, statements were made by the CWB suggesting that 65% to 80% of the crop has yet to be committed, while delays in product marketing can lead to lengthy pipeline delays later in the crop year. While it may in fact be the case that logistical issues will back up grain at some point in the future, the question remains whether producer deliveries are in fact running behind?
The attached chart shows the 2012 weekly deliveries of wheat (blue line) against the three-year average (2009/10 to 2011/12) weekly deliveries (red line). Of the 14 shipping weeks so far in this crop year, producer deliveries exceed 2011/12 deliveries in nine of the 14 weeks, while this year's producer deliveries exceed the three-year average deliveries in all but three weeks, as seen on the chart, with the blue line exceeding the red line. On a tonnage basis, 2012/13 year-to-date deliveries into the system, at 4.883 mmt, represent a 563,900 (13.1%) increase over 2011/12 and an 849,000 mt (21%) increase over the three-year average.
Cliff can be reached at email@example.com
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