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Spring wheat bids drop with large U.S. acreage ideas

MGEX May spring wheat dropped 24.25 U.S. cents per bushel on the week

Hard red spring wheat bids in Western Canada moved lower during the week ended March 29, as losses in Minneapolis futures weighed on values.

A report from the U.S. Department of Agriculture predicting much larger spring wheat acres in the country than many analysts had expected accounted for the sell-off in the futures that spilled into Canadian cash prices. USDA pegged intended U.S. spring wheat area in 2018 at 11.6 million acres, which would be well above the 9.6 million seeded in 2017. Statistics Canada releases its first survey-based estimates for Canada’s crop on April 27.

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Depending on the location, average Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices were down $9-$10 per tonne across the Prairie provinces, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices ranged from about $227 per tonne in western Manitoba and southeastern Saskatchewan to as high as $242 in northern Alberta.

Quoted basis levels varied from location to location and ranged from $2 per tonne below the futures to $13 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$176 to US$188 per tonne. That would put the currency-adjusted basis levels at about US$41-$53 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 $53 to $68 below the futures.

Canada Prairie Spring Red (CPSR) wheat bids were narrowly mixed, although the bias was slightly weaker in most locations. Prices ranged from $182 to $195 per tonne.

Average durum prices were steady to slightly lower, with bids in Saskatchewan coming in at about $254-$263 per tonne.

The May spring wheat contract in Minneapolis, off of which most CWRS contracts Canada are based, was quoted March 29 at US$5.785 per bushel, down 24.25 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 May K.C. wheat contract was quoted at US$4.6725 per bushel on March 29, down eight U.S. cents compared to the previous week.

The May Chicago Board of Trade soft wheat contract settled at US$4.51 on March 29, down 9.25 U.S. cents on the week.

The Canadian dollar settled March 29 at 77.56 U.S cents, down roughly a fifth of a cent on the week.

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Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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