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World weather concerns send Prairie wheat bids higher

Several key regional production estimates have been lowered

Hard red spring wheat bids in Western Canada climbed higher during the week ended July 27, as heat and dryness concerns in a number of key wheat-growing regions of the world sparked a rally in the United States futures.

Production estimates out of Europe, the Black Sea region, and Australia were all seeing downward revisions, which could lead to more demand for North American wheat going forward.

Average Canada Western Red Spring (13.5 per cent CWRS) wheat prices were up by $16 to $18 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 $229 per tonne in northwestern Saskatchewan, to as high as $258 in eastern Manitoba.

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Quoted basis levels varied from location to location and ranged from $12 to $41 per tonne above the futures when using the grain company methodology of quoting the basis as the difference between the U.S. dollar-denominated futures and the Canadian dollar cash bids.

When accounting for currency exchange rates by adjusting Canadian prices to U.S. dollars (C$1=US$0.7656) CWRS bids ranged from US$175 to US$197 per tonne. That would put the currency adjusted basis levels at about US$21 to US$43 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 $27 to $56 below the futures.

Canada Prairie Red Spring (CPRS) wheat bids were stronger, gaining anywhere from $13 to $15 per tonne depending on the location. Prices ranged from $205 to $222 per tonne.

Average durum prices were narrowly mixed, with bids in southern Saskatchewan coming in at about $253 per tonne.

The September spring wheat contract in Minneapolis, which most CWRS contracts Canada are based off of, was quoted at US$5.9250 per bushel on July 27, up by 37.50 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 September Kansas City wheat contract was quoted at US$5.3250 per bushel on July 27, up by 24.00 U.S. cents compared to the previous week.

The September Chicago Board of Trade soft wheat contract settled at US$5.3050 on July 27, which was up by 14.50 U.S. cents on the week.

The Canadian dollar settled at 76.56 U.S. cents on July 27, which was up by about half 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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