Wheat Markets Likely Happy for Halloween!
Grain markets moved into November with a lot of participants happy to see October is over. First, we had to wait until the middle of the month to get back into the fields to finish Harvest 2018, and then as that happened, canola and spring wheat prices on their respective futures boards started to fall. Specifically for the latter, the Minneapolis board saw losses of 3 to 8 cents USD per bushel, depending on the contract period.
This in mind, hedge funds go more bearish on spring wheat last week as Russia raised its spring wheat production outlook and farmer sales put some pressure on things.
On the cash market in Western Canada, 13.5% protein CWRS wheat prices bumped slightly higher with the futures market. Cash CWRS wheat prices are still tracking above last year’s values though, as well as the 3-year average and most areas are flirting with $7 CAD / bushel for immediate movement.
We’ve been joining in on the buzz that with the smaller wheat crop coming out of the Land Down Undaa thanks to the Aussie drought, Canadian wheat is likely to benefit. This is mainly because the Eastern Australian wheat crop is quite small and that’s where the higher-protein wheat in Australian comes from. Conversely, Western Australian tends to producer lower-protein wheat. Currently, Canadian non-durum wheat exports are still tracking 23% higher year-over-year with 4.7 MMT shipped out so far through Week 13 of the 2018/19 crop year.
Part of this stronger export campaign is CPS / lower-protein wheat though, who’s prices are certainly one of the bright spots in the Western Canadian grain markets. On the spot market, CPS wheat prices are tracking nearly 30% higher year-over-year and gained 5.5% alone in October!
Something that we’re being asked more by FarmLead users is if we should just be selling milling quality wheat – be it CWRS, CPS, or durum – into the feed market. This is tough question to ask, let alone answer, but for perspective, I am at 60% sold on my lower-protein/lower quality wheat today.
If you do have some of this lower quality product (i.e. low protein, maybe some sprouting or disease issues), then indeed, this product should be heading to the feed markets today. Very simply, you’re likely better off looking there if in need of cashflow today instead of playing around with the discounts you’d see on that sort of quality wheat if selling into the milling markets.
Finally, this week we get the USDA’s November WASDE report. Most of the focus of grain markets will intuitively been on the size of the U.S. corn and soybean crop. However, we’ll be looking at wheat production number updates to Australia and Argentina, as well as if the USDA recognizes wheat export activity thus far from Canada.
President & CEO | FarmLead.com