Cana­dian wheat prices be­gan their rise in July

Prairie Post (East Edition) - - Farm News - BY BREN­NAN TURNER, OPIN­ION

The month of July started out slow for wheat prices, but as we got into the sec­ond half of the month, things started to pick up.

We’ve started to see more ag­gres­sive moves in this first week of Au­gust, thanks to some drier weather in Europe, Aus­tralia, as well as North Amer­ica.

For the month of July though, as fu­tures prices in Chicago rose, ba­sis lev­els for CPS wheat, trended lower for the most part.

How­ever, it was not enough to negate the fu­tures climb, with av­er­age prices for CPS wheat across the Cana­dian Prairies climb­ing 13% in the month of July.

Con­versely, for hard red spring wheat prices, a 13% im­prove­ment on the fu­tures board in Min­neapo­lis, helped cash val­ues im­prove across the Prairies by roughly the same amount.

Ba­sis val­ues in Western Canada also im­proved sig­nif­i­cantly.

This week, win­ter wheat prices did touch a three-year high but it didn’t last. Chicago SRW wheat prices for Septem­ber 2018 gained 5% or about 26 cents USD / bushel to close at $5.56 while the De­cem­ber 2018 con­tract was up 5.4%, or nearly 30 cents, to fin­ish a tad un­der $5.80.

In Kansas City, HRW wheat prices were up about 35 cents across all con­tracts with the Septem­ber closing this week at $5.67, while De­cem­ber al­most touched $6.

It was in­cred­i­ble to watch the De­cem­ber SRW con­tract pop all the way up to $6.13 USD / bushel in Chicago be­fore a swift re­treat. The rea­son: Con­fu­sion over Ukraine’s wheat ex­port poli­cies moving for­ward. Ac­cord­ing to a Face­book post, the coun­try said it would limit ship­ments of milling wheat due to pro­duc­tion con­cerns thanks to the on­go­ing drought across East­ern Europe. But a later post by the fifth-largest ex­porter in the world clar­i­fied its state­ment to sug­gest it wasn’t propos­ing “strict lim­its.”

Now, it’s ex­pected that Ukraine’s Ag Min­istry will sign a memo that sets lim­its for traders for the 2018/19 mar­ket­ing year. This is rem­i­nis­cent of the ex­port re­stric­tions that Rus­sia placed on ex­ports back in 2010-11 af­ter a drought and high heat hin­dered crop pro­duc­tion.

While Euro­pean weather and Ukrainian poli­cies hit the head­lines this week, con­di­tions con­tinue to de­te­ri­o­rate for wheat farm­ers in Aus­tralia as well.

The coun­try’s Bureau of Me­te­o­rol­ogy said that the coun­try is ex­pe­ri­enc­ing its sec­ond warm­est sum­mer (De­cem­ber to Fe­bru­ary) on record. Its au­tumn months (March to May) have been among the dri­est and hottest in mea­sured history.

On that note, in Min­neapo­lis, new crop spring wheat prices gained nearly 4% to now sit at near $6.30 USD / bushel on the De­cem­ber 2018 con­tract and $6.45 for the March 2019. This was mainly due to play­ing fol­low-the-leader to win­ter wheat prices. There are also some on­go­ing con­cerns over the drier con­di­tions in part of Western Canada and North Dakota.

Moving for­ward, we’ll get the next WASDE re­port from the USDA on Friday, Au­gust 10th.

Over­all though, this week, the mar­ket priced in some of this ad­di­tional wheat pro­duc­tion risk this week. There might be more cat­a­lysts to the up­side as yield re­ports con­tinue to come in from Europe and now, North Amer­ica.

Bren­nan Turner is the Pres­i­dent & CEO of Far­mLead.com

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