Farmers prepping for 2021

For lower protein wheat, it’s a similar story to HRS wheat, as futures values have risen significantly, and with basis relatively flat, cash values are nearly 20% higher for new crop pricing opportunities compared to what they were a year ago. Can futures push higher on drought concerns? Will basis improve if the Canadian Loonie weakens? These are all unknowns and will impact your unpriced bushels. In order to reduce my exposure to these unknowns/risk, I’m comfortable locking in as much as 30% - 40% of expected 2021/22 production before I plant a seed (and potentially even more if I’m hedging those contracts in the futures markets). While supposed global drought issues could continue to bring higher premiums yet, you’ll still have more than half of the crop to sell and, what’s more, your hedges should help protect you as well (I’d recommend working with a professional if you’re not familiar with the hedging tools available to you).

While we tend to focus on wheat in this column, it’s hard to ignore the other major Western Canadian crop: can ola. While new crop can ola futures are now more than $100 CAD/ MT below that of front-month contracts and cash values have a similar spread, basis levels for movement today are virtually the same as new crop movement periods. What this suggests is that locking in basis today, you can price any higher futures value between now and movement of said can ola. This is important to note, as between now and then, futures values for front month and new crop are likely to converge, meaning new crop futures could increase a bit. Finally, compared to a month ago, today’ s basis levels in Saskatchewan are telling us that a lot of new crop has already been bought( hence the basis in Saskatchewan widening

in the past 30 days ), and acres in the Land of Living Skies province are sure to increase.

Brennan Turner, President & CEO, FarmLead.com