Jerry Klassen of Winnipeg-based Resilient Commodity Analysis said conditions so far have been optimal for the wheat variety and if all goes well, above-average yields could be on the horizon.

“We’ve had significant rains in western Saskatchewan through the growing season. Seeding was a little bit delayed in some areas, but for the most part, the crop is off to a great start,” he said.

However, Klassen recalled that last year’s crop was also off to a great start before dryness and drought conditions reigned supreme from mid-June to the end of the growing season.

“That resulted in lower yields. Right now, I would say the crop is just about the same or a little bit better at this time,” he said. “This year, it looks like the forecast calls for regular rains in the durum areas and we’re not expected to see the extreme heat like we had last year in the summer.”

Klassen estimated that six million acres of durum wheat were seeded this year across Canada with expected production at approximately 7.5 million tonnes. In Agriculture and Agri-Food Canada’s (AAFC) monthly principal field crops outlook released on June 20, the agency estimated 6.343 million acres with production at 5.655 million tonnes. Statistics Canada (StatCan) will release their latest acreage estimates on June 27.

Canadian Western Amber Durum (CWAD) prices in Western Canada as of June 21 ranged from C$349.87 to C$366.48 per tonne (C$9.52 to C$9.97 per bushel) according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes).

As durum growers are usually reluctant to forward-sell, according to Klassen, prices in Canada are now at a similar level to those in Europe.

“What we’re seeing here is a relatively bigger crop developing in Turkey than last year. So we’re expecting an increase in Turkish exports and that harvest is going to move into full swing here in July,” he said, adding that the durum harvest is also expected next month in southern France and Spain.

Areas that have already begun their harvest are so far reporting good quality with slightly below-average yields.

“What’s happened is not (so much) Canadian farmer selling, but we’re seeing farm selling from other areas in Turkey and also in Europe … There’s significant harvest pressure in the durum market now. Canadian durum values probably are a little bit overvalued yet compared to where we could see prices a month from now.”

Klassen expects prices to stay put and then decline as growers jump at the chance to convert their durum crop into cash flow.

“The Canadian market will likely stay flat for the next three to four weeks and then maybe come under a little bit of pressure at harvest yet, but we’re not expecting a rally until probably next spring when the market starts to factor in lower acreage in Canada and the United States,” he said.

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Wheat futures tested fresh contract lows during the week, but also uncovered support at times amid the general downtrend.

Average Canada Western Red Spring (13.5%) wheat prices were up by C$0.80 to down by C$3.50 per tonne across the Prairies, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices ranged from C$288.80 per tonne in southeastern Saskatchewan to as high as C$317.10 per tonne in southern Alberta.

Quoted basis levels varied from location to location and ranged from $47.90 to $76.30 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 everything into Canadian dollars (C$1=US$0.7411) CWRS basis levels ranged from C$4.30 to C$19.90 below the futures.

Canada Prairie Spring Red (CPSR) wheat bids were lower, down by C$0.10 to C$0.60 per tonne, with prices ranging from C$247.30 to C$272.10 per tonne.

Average durum prices lost C$4.70 to as much as C$6.90 per tonne, ranging from C$392.10 to C$407.80 per tonne.

Spring wheat futures in Minneapolis were down by 3.25 cents per bushel in the May contract to settle at US$6.5550 per bushel on Feb. 22.

The Kansas City hard red winter wheat futures, which are now traded in Chicago, are more closely linked to CPSR in Canada. The May Kansas City wheat contract was up by 1.50 cents on the week to close at US$5.7150 per bushel on Feb. 22.

The May Chicago Board of Trade soft wheat contract settled at US$5.7925 per bushel on Feb. 22, up by 12.00 cents on the week.

The Canadian dollar held steady relative to its United States counterpart, closing at 74.11 U.S. cents on Feb. 22.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg. 

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There were gains in Minneapolis spring wheat, while Kansas City and Chicago winter wheat contracts slipped back.

At the beginning of the week there were steep increases for wheat as Russian launched missile and drone attacks on Ukraine’s ports on the Black Sea, but also its ports on the Danube River. By Wednesday those gains had been erased as concerns over the war subsided.

The reduced severity of drought conditions across the Canadian Prairies and the United States Plains provided additional pressure on wheat.

Average Canadian Western Red Spring Wheat (CWRS, 13.5%) wheat prices declined 30 cents to C$5.40 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Those prices ranged from about C$387.10 per tonne in southeastern Saskatchewan to C$408.00 per tonne in northern Alberta.   

Quoted basis levels varied from location to location and ranged from C$54.90 to C$75.80 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 United States dollars (C$1=US$0.7575), CWRS bids ranged from US$293.30 to US$309.10 per tonne. That would put the currency adjusted basis levels at about US$23.20 to US$39.00 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 ranged from C$17.60 to C$29.50 below the futures.

Average Canada Prairie Red Spring (CPRS, 11.5%) wheat prices lost C$5.70 to C$12.70 per tonne. Bids ranged from C$362.90 per tonne in southeastern Saskatchewan to C$381.20 per tonne in northern Alberta.

Average Canadian Western Amber Durum (CWAD) prices jumped C$42.00 to C$58.90 per tonne, with bids ranging from C$459.20 per tonne in southern Alberta to C$471.90 per tonne in western Manitoba.

The September spring wheat contract in Minneapolis, which most CWRS contracts Canada are based off of, was quoted at US$9.0425 per bushel on July 27, bumping up 2.25 cents on the 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$8.6650 per bushel on July 27, adding 8.25 cents compared to a week ago.

 The September Chicago Board of Trade soft wheat contract settled at US$7.1275 per bushel on July 27, dropping 14.25 cents from the previous week.

The Canadian dollar eased back 0.17 of a cent at 75.75 U.S. cents, which provided some support to Canadian prices. However, during the week, the loonie pushed towards 76 U.S. cents before retreating.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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Durum prices in southern Saskatchewan have traded in the $235-$243 per tonne area over the past month, a relatively narrow $8 trading range compared to Canada Western Red Spring (CWRS) wheat, which moved in a $30 range over the same time period.

The solid feed market in southern Alberta is setting a floor for the durum market, while the upside is limited by a lack of excitement on the export side, according to Jerry Klassen, manager of Canadian operations with Swiss-based GAP S.A. Grains and Products in Winnipeg.

The export market is still relatively slow for new-crop business, but old-crop movement has picked up recently, according to Klassen.

Much of the prime durum growing area of southern Saskatchewan is on the dry side, and will need more rain in the upcoming weeks, said Klassen.

Canadian farmers intend to plant 5.02 million acres of durum this year, which would be well below the 6.19 million seeded the previous year and the smallest acreage base since 2014, according to Statistics Canada data.

Canada has exported 3.64 million tonnes of durum during the 2018-19 crop year-to-date, which compares with 3.36 million at the same point a year ago and the five-year average for this time of year of 3.55 million.

Country-specific data is only current up to the end of March, with Turkey and Tunisia both seeing sizeable increases in demand on the year. Algerian demand is down on the year, but Klassen said business there was starting to pick up.

While country-of-origin labelling legislation in Italy has hampered some movement to the major pasta-producing country, exports as of the end of March of 250,000 tonnes were only about 33,000 tonnes behind the year-ago pace.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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Average Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices were down, falling $3-$4 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 $246 per tonne in southeastern Saskatchewan to as high as $267 in southern Alberta.

Quoted basis levels varied from location to location and ranged from $36 to $57 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$186 to US$201 per tonne. That would put the currency-adjusted basis levels at about US$1-$26 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 $10 to $31 below the futures.

Canada Prairie Spring Red (CPSR) wheat bids were slightly weaker, falling by around $1 per tonne depending on the location. Prices ranged from $222 to $244 per tonne in Alberta and Saskatchewan.

Average durum prices were slightly stronger, with bids ranging anywhere from $220 in northwestern Saskatchewan to $236 in western Manitoba, depending on the location.

The March spring wheat contract in Minneapolis, off of which most CWRS contracts Canada are based, was quoted Jan. 11 at US$5.70 per bushel, down a quarter of a U.S. cent from the previous week.

Kansas City hard red winter wheat futures, traded in Chicago, are more closely linked to CPSR in Canada. The March K.C. wheat contract was quoted Jan. 11 at US$5.045 per bushel, down 1.5 U.S. cents compared to the previous week.

The March Chicago Board of Trade soft wheat contract settled at US$5.195 per bushel on Jan. 11, up 2.5 U.S. cents on the week.

The Canadian dollar settled Jan. 11 at 75.42 U.S. cents on Jan. 11, up by 0.85 of a U.S. cent on the week.

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Depending on the location, average Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices were down $12-$16 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 $233 per tonne in northwestern Saskatchewan to as high as $262 in southern Alberta.

Quoted basis levels varied from location to location and ranged from $10 to $39 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$180 to US$202 per tonne. That would put the currency adjusted basis levels at about US$21-$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 Spring Red (CPSR) wheat bids fell anywhere from $7 to $12 per tonne depending on the location. Prices ranged from $220 to $234 per tonne.

Average durum prices were lower, with bids in Western Canada coming in at about $238-$265 per tonne.

The July spring wheat contract in Minneapolis, off of which most CWRS contracts Canada are based, was quoted June 1 at US$6.04 per bushel, down 40.25 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 July K.C. wheat contract was quoted at US$5.4075 per bushel on June 1, down 23.25 U.S. cents compared to the previous week.

The July Chicago Board of Trade soft wheat contract settled at US$5.2325 on June 1, down 19.75 U.S. cents on the week.

The Canadian dollar settled June 1 at 77.14 U.S. cents, up 0.06 cents on the week.

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Average Canada Western Red Spring (CWRS, 13.5 per cent) wheat prices rose by $3 per tonne across most of 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 northwestern Saskatchewan, to as high as $253 in northern Alberta.

Quoted basis levels varied from location to location but overall prices were $4-$30 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$177 to US$196 per tonne, which was mixed on a U.S. dollar basis for the week. That would put the currency-adjusted levels at about US$27-$46 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 $34 to $60 below the futures.

Canada Prairie Spring Red (CPSR) wheat bids were up $13-$15 per tonne, with prices ranging from $200 to $219 per tonne.

Average durum prices fell, with prices dropping $1-$3 per tonne. Bids across Western Canada ranged from $233 to $258 per tonne.

The July spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted April 27 at US$6.08 per bushel, up 2.25 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 July K.C. wheat contract was quoted at US$5.3025 per bushel on April 27, down 28.25 U.S. cents compared to the previous week.

The July Chicago Board of Trade soft wheat contract settled at US$4.985 on April 27, up 21.25 U.S. cents on the week.

The Canadian dollar settled April 27 at 77.78 U.S. cents, down 0.79 U.S. cents on the week.

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Italian COOL regulations are set to come into effect in mid-February and require pasta makers in the country to segregate foreign durum, which will add costs and may cut into demand for some Canadian grain. Italy is a major buyer of Canadian durum.

“There’s no doubt that there’s a negative perception for Canadian durum, but the quality, especially this year is phenomenal, and a lot of mills in Italy rely on Canadian durum,” said Jerry Klassen, manager of the Canadian office for Swiss-based GAP SA Grains and Products in Winnipeg.

“I think we’re still in a wait-and-see mode how this will play out,” he said, adding “Canadian durum has a fairly good reputation in Italy and Europe and general.”

Concerns over glyphosate residue on Canadian durum have hurt that reputation somewhat and were a factor in the COOL regulations.

However, “last year, it was so dry, I think you’d be hard pressed to find any farmer who used glyphosate on his durum,” said Klassen.

Glyphosate is not an optimal desiccant for durum, he added, and is rarely if ever used for that purpose.

Total Canadian durum exports to all destinations to date of 1.67 million tonnes compare with the 1.78 million tonnes exported during the same period in 2017-18, according to the latest data from the Canadian Grain Commission.

Durum prices are currently in the $270-$275 per tonne area in southern Saskatchewan, according to the latest Price and Data Quotes (PDQ) data. That compares with prices above $300 in August when the industry was concerned over drought conditions in Canada and the northern U.S.

“We had a very strong North American durum market with the drier conditions in Canada and the U.S.,” said Klassen. The market rationed demand at the time, but the yields beat expectations and left Canada with about a million more tonnes of durum than originally expected.

“Right now we’re feeling the effects of the rationing of demand in the first half of the year when we lost demand, and you never get it back,” said Klassen.

“Now the market has gone from rationing demand to a time it needs to encourage demand,” he said, adding “the only way to do that is through lower prices.”

As a result, “the market will be hard pressed to go higher,” he said, pointing to increased competition in the world and the fact that the seasonal nature of the durum market means that much of the demand is already covered for the year.

“At the same time, the farmer is selling about 100,000 tonnes a week which seems sufficient to meet the exports we do have on track,” he said. He thought farmers were probably selling a bit more durum than they would otherwise due to poor prices for other crops, especially pulses.

While farmers are selling enough durum to meet the demand, “we can’t underestimate the power of the farmer to hold back on sales,” said Klassen. Farmers grew a good-quality crop in 2017 and will be prone to storing on-farm for better prices.

Looking ahead to the new crop year, the trade is factoring in about a 15 per cent increase in durum at the expense of specialty crops, according to Klassen.

Canada seeded 5.21 million acres of durum in 2017, harvesting a 4.96 million-tonne crop.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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Depending on the location, average Canada Western Red Spring (13.5 per cent protein CWRS) wheat prices were down $3 to $5 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 $242 per tonne in western Manitoba, to as high as $264 in northern Alberta.

Quoted basis levels varied from location to location, but generally improved to range from about $9 to $31 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$0.7823) CWRS bids ranged from US$189 to US$207 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$26 to US$44 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 $33 to $56 below the futures.

Canada Prairie Red Spring (CPRS) wheat bids were anywhere from $4 higher to $7 higher. Prices across the Prairies ranged from $172 per tonne in southeastern Saskatchewan to $191 per tonne in northern Alberta.

Average durum prices held within a couple of dollars unchanged, with bids in Saskatchewan and Manitoba ranging from about $267 to $281 per tonne.

The December spring wheat contract in Minneapolis, which most CWRS contracts Canada are based off of, was quoted at US$6.35 per bushel on Nov. 17, which was down by 13 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 December Kansas City wheat contract was quoted at US$4.20 per bushel on Nov. 17, down by 9 U.S. cents compared to the previous week.

The December Chicago Board of Trade soft wheat contract settled at US$4.2725 on Nov. 17, which was down by 1.75 U.S. cents on the week.

The Canadian dollar settled at 78.23 U.S. cents on Nov. 17, which was down by roughly half a cent compared to the previous week.

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Depending on the location, average Canada Western Red Spring (CWRS) wheat prices were mostly higher, rising by $1 to as much as $9 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 $217 per tonne in western Manitoba to as high as $239 in northern Alberta.

Quoted basis levels varied from location to location and ranged from about $31 to $44 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$163 to US$179 per tonne. That would put the currency-adjusted basis levels at about US$16-$32 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 $21 to $42 below the futures.

Canada Prairie Spring Red (CPSR) wheat bids were steady, with prices ranging from $156 to $169 per tonne.

Average durum prices held steady, with bids ranging from C$253 to C$258.

The July spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted April 13 at US$5.3875 per bushel, up by 11.75 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 July K.C. wheat contract was quoted April 13 at US$4.3925 per bushel, up by five U.S. cents compared to the previous week.

The July Chicago Board of Trade soft wheat contract settled April 13 at US$4.4275, up by 6.5 U.S. cents on the week.

The Canadian dollar settled April 13 at 75.03 U.S. cents, up by nearly half a cent relative to its U.S. counterpart compared to the previous week.

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