Wheat Markets Pricing in Supply, Quality
Last Thursday, the USDA released the 2018 October WASDE report which gave us new insights into the global and American wheat outlook for 2018/19. It was a bit bearish as the USDA increased American spring production by 4 million bushels, putting 2018/19 production now at 587 million bushels (or 16 MMT), a jump of 52% over last year’s dry year.
With the increase in US production, U.S. spring wheat carryout was raised by 9 million bushels. While this is still below the 283 million bushels the USDA was estimating back in July, the bigger spring wheat carryout is a bit bearish.
Here’s a breakdown of the other major numbers that the market was watching for.
Through Friday, October 12th, hard red spring wheat prices across Western Canada have continued to rally off their harvest lows, with average prices up 5.5% from last month and nearly 10% compared to where they were a year ago.
On a more regional basis, Western Manitoba has seen the strongest rally over the past month. In most places across Saskatchewan & Manitoba, farmers continue to look for the psychologically-significant $7 CAD / bushel, and we don’t think it’s far off.
For CPS wheat prices, cash values are tracking well above where they were at this time a year ago. We have a suspicion that CPS wheat and other low-protein varieties like SWS and General Purpose are associating more with the feed market across Western Canada. On that note, last week, we did see a trade for $7 CAD / bushel feed wheat delivered into Lethbridge, AB!
Conversely, durum prices across Western Canada remain depressed thanks to some subdued demand, decent quality already available, and buyers seemingly only interested in a hand-to-mouth purchasing campaign. Average durum prices this past week were up compared to the week prior, but they’re still finding a harvest low, now down nearly 20% year-over-year.
Overall, we estimate that there was still about 7.25 MMT of spring wheat and 1.05 MMT of durum left to be combined headed into this past weekend. As per StatsCan’s September satellite-based production forecast, this represents about 32% and 18.5% respectively of the total harvest for both crops.
This in mind, roughly 9 out of every 10 cereal negotiations on the FarmLead Marketplace we’ve seen the last 2 weeks, credit-verified buyers are asking for additional quality information from sellers.
If you haven’t got numbers on your spring wheat or durum, then we strongly recommend you get those datapoints ASAP from GrainTests.com or elsewhere. If you haven’t been able to harvest your spring wheat or durum yet, then order your tests anyways so that, as soon as it’s coming off the combine, it’s heading into the lab.
President & CEO | FarmLead.com