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Prairie wheat bids fall as dollar rises

Canadian farmers are starting to lose the exchange rate protection they’ve enjoyed

Hard red spring wheat bids in Western Canada fell over the holidays, while the Canadian dollar was on an upward swing.

Depending on the location, average Canada Western Red Spring (13.5 per cent protein CWRS) wheat prices fell by approximately $3 to $4 per tonne in some areas of Western Canada, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices ranged from about $228 per tonne in western Manitoba, to as high as $249 in parts of Alberta.

Quoted basis levels varied from location to location, but fell slightly to range from about $2 to $23 per tonne above the futures when using the grain company methodology of quoting the basis as the difference between the United States dollar-denominated futures and the Canadian dollar cash bids.

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When accounting for currency exchange rates by adjusting Canadian prices to U.S. dollars (C$1=US$0.7971) CWRS bids ranged from US$182 to US$198 per tonne, which was down on a U.S. dollar basis on the week. That would put the currency adjusted basis levels at about US$28 to US$34 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 $63 to $84 below the futures.

Canada Prairie Red Spring (CPRS) wheat bids were down a dollar. Prices across the Prairies ranged from $172 per tonne in southwestern Saskatchewan to $191 per tonne in parts of Alberta.

Average durum prices were down slightly across Western Canada, with bids ranging from about $266 to $271 per tonne.

The March spring wheat contract in Minneapolis, which most CWRS contracts Canada are based off of, was quoted at US$6.1475 per bushel on Dec. 29, which was up by three U.S. cents from the previous week.

The Kansas City hard red winter wheat futures, which are now traded in Chicago, are more closely linked to CPRS in Canada. The March Kansas City wheat contract was quoted at US$4.2725 per bushel on Dec. 29, up by five U.S. cents compared to the previous week.

The March Chicago Board of Trade soft wheat contract settled at US$4.27 on Dec. 29, which was up by 2.25 U.S. cents on the week.

The Canadian dollar settled at 79.71 U.S. cents on Dec. 29, which was up by 1.33 cents compared to the previous week.

About the author

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Ashley Robinson - MarketsFarm

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

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