FarmLead COLUMN: Pricing in premiums

Wheat, oats, oilseed and other crops discussed in this week’s FarmLead

For the wheat complex, we know things have been volatile, and prices have dropped since those highs on July 5.

The best Minneapolis hard red spring wheat price on the December contract this month hit $8.43/bushel. The high of the same contract on the Kansas City hard red winter wheat price board hit $6.02/bushel. Finally, the heavily-traded Chicago soft red spring wheat market topped $5.745 for the December contract.

Oats have been a strong performer this month. The December contract is still sitting near its high price of $3.028 seen on July 18 on the Chicago Board of Trade. From a cash stand point, this market looks to be stable with the price supporting the expected production. The highs for December corn and November soybeans were both seen on July 11 at $4.173 and $10.47 per bushel respectively. The best canola price for the November contract was above $530 CAD/metric tonne.

However, the oilseed, which is traded on the Winnipeg ICE futures exchange has technically fallen 7.65 per cent since the end of June. This drop is mainly due to a stronger Canadian Dollar. With an interest rate increase by the Bank of Canada, this month has helped the Loonie gain 4.2 per cent against the US Dollar and 10 per cent premium against the Greenback since May.

From the most recent Alberta crop report, crop ratings are also dropping pretty fast. Average good-to-excellent (G/E) ratings across the Wildrose province for all crops fell 4.5 points from last week to 60 per cent. The five-year average is 73.5 per cent G/E. Digging in, Alberta’s spring wheat G/E ratings were counted as 63 per cent this week. Last week it was 66 per cent. Last month’s Albertan spring wheat G/E rating was 80 per cent.

It’s a similar dynamic in durum wheat as the end of June, the Alberta crop was rated 81 per cent G/E, last week it was 62 per cent, and this most recent crop report it was 40 per cent. Alberta barley crop G/E ratings have also dropped to 55 per cent from 62.4 per cent last week and 78 per cent a month ago. Finally, the percentage of canola crops rated G/E a month ago was 74 per cent and last week it was 64 per cent. This week, Alberta canola crops rated G/E fell another 2.5 points to 61.6 per cent.

We can all agree that we do not have last year’s crop in North America either. We can probably also agree that the worst areas of production won’t be balanced by the best areas. It is hard though, to ignore the size of the carry out to not only start the 2017/18 crop marketing year but also where supply will be at the end of said crop season. As a side note, the International Grains Council flagged US durum export prices as high as $329 USD/MT ($8.95 USD / bushel, $11.25 CAD / bushel).

Fourteen per cent protein US dark northern spring wheat prices were trading out of Pacific northwest ports at $345 USD/MT ($9.40 USD / bushel, $11.80 CAD / bushel). These values are supported by the cash trades on the FarmLead Marketplace for country origination trades. This means that you should not expect these port, export-ready prices at your local grain elevator per se.

However, given where crop conditions are trending, you could see cash values trend higher towards these levels in the next month or two if you include the protein premium.

To growth,

Brennan Turner

President | CEO

North America’s Grain Marketplace

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