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Dropping U.S. futures drag Prairie wheat bids lower

Minneapolis, Chicago and Kansas City December wheat all dropped significantly on the week

Wheat bids in Western Canada were down again for the week ended Sept. 7, following the lead of U.S. futures markets. While U.S. futures dropped significantly, a weaker Canadian dollar held back losses for Prairie wheat bids.

Average Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices were down $1-$2 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices ranged from about $230 per tonne in northwestern Saskatchewan to as high as $258 in southern Alberta.

Quoted basis levels varied from location to location and ranged from $1 to $29 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.

When accounting for currency exchange rates by adjusting Canadian prices to U.S. dollars, CWRS bids ranged from US$175 to US$196 per tonne. That would put the currency-adjusted basis levels at about US$33-$54 below the futures.

Looking at it the other way around, if the Minneapolis futures are converted to Canadian dollars, CWRS basis levels across Western Canada range from $43 to $71 below the futures.

Canada Prairie Spring Red (CPSR) wheat bids were weaker, dropping anywhere from $8 to $9 per tonne depending on the location. Prices ranged from $203 to $220 per tonne.

Average durum prices were lower, with bids ranging anywhere from $223 in northwestern Saskatchewan to $249 in southern Alberta, depending on the location.

The December spring wheat contract in Minneapolis, off of which most CWRS contracts Canada are based, was quoted Sept. 7 at US$5.70 per bushel, down 13.75 U.S. cents from 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$5.1475 per bushel on Sept. 7, down 26.25 U.S. cents compared to the previous week.

The December Chicago Board of Trade soft wheat contract settled at US$5.1125 per bushel on Sept. 7, down by 23.75 U.S. cents on the week.

The Canadian dollar settled Sept. 7 at 75.96 U.S. cents, down by more than a cent on the week.

About the author

CNSC

Ashley Robinson writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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