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Good year for Prairie spring wheat, not so much for durum

Spring wheat prices are expected to see pressure in the new year

While spring wheat prices in Western Canada enjoyed a strong year, durum prices weren’t so lucky. Heading into 2019, spring wheat prices could fall victim to increasing global wheat acreage, while durum prices will need to see acreage fall.

Data from the PDQ (Price and Data Quotes) show Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices started 2018 around $243 per tonne and finished it at about $257. Canada Prairie Spring Red (CPSR) wheat bids started the year around $188 and ended it at about $232. Durum prices in Western Canada started out around $265 and dropped to around $226 by year’s end.

In U.S. futures markets, Kansas City hard red winter wheat futures rose, supporting CPSR. The Canadian dollar also weakened over the course of the year, supporting CWRS and CPSR prices.

Although Minneapolis spring wheat contracts weakened over the course of the year, CWRS prices didn’t follow suit. Durum also didn’t find itself getting any support from the weaker loonie.

Internationally, many factors influenced wheat prices. Droughts throughout northern and eastern Europe and in Australia hampered global wheat production and were supportive for North American markets.

Globally, “this was probably the first year in the last four or five where we have arrested the trend towards higher world wheat ending stocks,” said Mike Jubinville of ProFarmer Canada in Winnipeg.

Internationally, he said, Canada has set itself up as the go-to place for higher-protein, higher-quality wheats. According to data from the Canadian Grain Commission, for the 2018-19 crop year, Canada had exported 6,901,100 tonnes as of Dec. 9, topping last year’s 5,819,600 tonnes.

Russia in recent years has set itself up as the global wheat export powerhouse, but its 2018-19 crop was smaller and the last quarter of 2018 was full of musings about when it would finally have to scale back its export pace.

Durum continued to be hampered by global trade issues. Italy has slowed down on importing Canadian durum as rumours spread throughout the country it has too high of a glyphosate residue. The northern Mediterranean region experienced good durum crops in 2018, meaning it hasn’t needed to import as much this year.

Heading into 2019, Jubinville doesn’t expect the durum market to change its course any time soon unless Canadian farmers seed less of it. Jerry Klassen of GAP SA Grains and Products in Winnipeg expects durum acres to decrease, which will then lead to an uptick in prices.

“Once we get into April, May, June, you will probably see the durum start to percolate higher,” Klassen said. “We’ll have lower acreage and the durum market is going to be very sensitive to North American weather next year.”

However, both expect spring wheat prices will see pressure in the new year. “Once you get through March, I think the focus starts to (be on) the year-over-year increase in overall world wheat production from the Northern Hemisphere… and you’ll probably see some pressure on prices,” Klassen said.

Jubinville is recommending producers lock in new-crop bids already, if they can. With prices mostly near the $6.50- to $7-per-bushel mark, producers should be thinking ahead, he said, “because if big crops come online next year, I can tell you these prices are going to be long gone.”

About the author

CNSC

Ashley Robinson writes for MarketsFarm specializing in grain and commodity market reporting.

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