Strong cash prices and flexibility are credited
Prairie farmers are selling aggressively into the cash market after harvesting their first crop following the demise of the single desk.
“Without the (Canadian) Wheat Board, farmers aren’t limited in terms of delivery calls, so they can deliver as much as they want or as little as they want,” noted Jon Driedger, an analyst with FarmLink Marketing Solutions in Winnipeg.
“So in some cases, farmers have been taking advantage of that flexibility and are delivering into the system quite heavily.”
Strong prices — CWRS was fetching as much as $8.67 a bushel on Nov. 5 — have also been a big draw, he added.
Cash market prices here are following the action seen in outside futures markets, primarily the Minneapolis Grain Exchange (MGEX).
“Even when the wheat board was in control, the MGEX was a relevant and important market to help us understand what spring wheat was valued at internationally and in the U.S.,” he said. “And now it’s simply just applying that to the new system in Western Canada.”
Higher corn prices throughout the summer and a good chunk of the fall were also responsible for some of the price strength, and both domestic and export demand is high, Driedger said.
“All the different grain companies are bidding for wheat,” he said. “And some of them are being pretty aggressive in offering some attractive terms and programs.”
Recent Chinese buying has been a major factor and analysts are expecting overall demand will pick up even more because of production problems in other parts of the world.
“The former Soviet Union has been a very aggressive exporter of wheat in the past, but they had a smaller crop this year, so there’s a feeling that their supplies are running low,” Driedger said. “And that is expected to direct more business to North America.”