Market Insider

Wheat Prices Began Their Rise in July

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.

To growth,

Brennan Turner

President & CEO |