MarketsFarm — Despite the usual harvest pressures, western Canadian wheat bids jumped during the week ended Thursday, largely due to geopolitical and macroeconomic factors.
The U.S. Federal Reserve on Wednesday again raised its key interest rate to combat rising inflation — this time a 75 basis point increase, to 3.25 per cent. The rate hike resulted in added strength to the greenback, evidenced by the U.S. Dollar Index surpassing 111 points for the first time since 2002.
Adding to the uncertainty in wheat prices was Wednesday’s announcement by Russian President Vladimir Putin of a partial mobilization of Russian military reservists to fight the war in Ukraine. Putin’s sentiments have previously raised doubts that an agreement to allow Ukrainian grain shipments on the Black Sea would be renewed after it expires at the end of October.
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However, the International Grain Council (IGC) on Thursday published its monthly worldwide production estimate, in which projected wheat production for the 2022-23 marketing year was raised 14 million tonnes to a record-breaking 792 million. Rains forecast for the U.S. Midwest also provided pressure to prices.
Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices were significantly higher, up $27.30-$31.80 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $414.30 per tonne in southeastern Saskatchewan and $439.90 in southern Alberta.
Quoted basis levels ranged from $55.60 to $81.20 per tonne above the futures when using the grain company methodology of quoting the basis as the difference between U.S. dollar-denominated futures and Canadian dollar cash bids.
Accounting for exchange rates and adjusting Canadian prices to U.S. dollars, CWRS bids were from US$307.30 to US$326.30 per tonne. Currency-adjusted basis levels ranged from US$32.40 to US$51.40 below the futures. If the futures were converted to Canadian dollars, basis levels would be $24-$38.10 below the futures.
Average Canada Prairie Spring Red (CPSR, 11.5 per cent protein) prices gained $30.10-$33.50 per tonne. The lowest average bid for CPSR wheat was $400.80 per tonne in southeastern Saskatchewan, while the highest average bid was C$419.80 in southern Alberta.
Meanwhile, average Canada Western Amber Durum (CWAD) prices were up $9.20-$17.10, with bids ranging from $410.60 per tonne in southeastern Saskatchewan to $417.60 in western Manitoba.
The December spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted at US$9.7775 per bushel on Thursday and 49 U.S. cents higher than the previous week.
Kansas City hard red winter wheat futures, traded in Chicago, are more closely linked to CPSR in Canada. The December K.C. wheat contract was quoted at US$9.795/bu., up 53.25 U.S. cents.
The December Chicago Board of Trade wheat contract gained 65.75 U.S. cents from the previous week to close Thursday at US$9.1075/bu.
The Canadian dollar lost 1.58 U.S. cents from the previous week, to close Thursday at 74.18 U.S. cents.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
