The news is not good — but it will get better, say market analysts

A French farmer harvests wheat at sunset at Paillencourt in northern France on July 23, 2019. French wheat production, which survived a record heat wave in June, is one of many factors now weighing on prices.

Harvest is one of the worst times to look for good news in wheat markets, 
but prices should soon rally

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It’s not hard to find bad news these days when it comes to wheat markets.

Recent news stories include the USDA surprising analysts by raising its production forecast (by 59 million bushels), European wheat fields coming through a record-breaking heat wave in fine shape, and the threat from Black Sea producers continuing to rise. (For example, Ukraine grain exports are ahead of last year’s record-setting pace and Germany is scrambling for new markets after the Saudis lower their standards so they can buy Russian wheat.)

Those and other factors are pushing wheat prices lower as producers harvest this year’s crop.

But take heart, prices will soon rally, according to two market experts.

“It seems like every year we forget the idea that prices seem to decline during the summer. A lot of what you’re seeing is seasonal,” said Chuck Penner of Left Field Commodity Research.

Prices start to dip when the American winter wheat harvest begins in late June or early July.

“At the same time, you have harvests going on in western Europe and so on, so there tends to be this heaviness that just settles over the market as fresh supplies arrive,” he said.

However, the Russian crop seems to get reduced as the harvest progresses, and there are often reductions in European production as well, which makes the outlook a little more favourable.

“At the same time in Western Canada, we’re seeing conditions improve considerably, especially compared to where we were in the middle of June,” said Penner.

“In general, we’re looking at heavier supplies. (But) that’s not what’s driving the market lower. It’s mainly seasonal.”

Expect harvest news to pressure prices until the middle or end of next month, said Brennan Turner, president and CEO of

“We’re finding some surprisingly larger-than-expected yields in a couple of places,” said Turner. “(While) there are some pockets in Russia and the EU where we have seen production numbers drop a little bit, places like Argentina, the U.S. and Ukraine are making up for those production losses,” he said.

Market watchers are now shifting their focus to Australia, which has been suffering from persistent drought conditions for four years running.

And the news there — from a competitor’s point of view — is good as the world’s fourth-largest wheat exporter continues to suffer from persistent drought conditions. The situation was highlighted in May when a shortage of high-protein milling wheat forced one Australian company to buy Canadian wheat. And that may happen again — New York-based analysts S&P Global recently reported the country is expected to import as much as 500,000 tonnes of high-quality Canadian wheat in the coming year.

Production in Australia is actually expected to rise this year but given its wheat exports fell by half last year, harvest numbers from Down Under are expected to be bullish for wheat prices.

“That’s going to help drive prices,” said Turner. “That will only be known after that mid-October time frame, when the harvest over there will be picking up the pace.”

So look for a price bounce in November, he said.

But don’t just focus on short-term markets because while prices are lower, they’re not historically low, he added.

“CPS (Canada Prairie Spring) prices, other than last year, have never been this good,” said Turner. “We have to credit the producer groups for that, because they have been pushing CPS interest in South American, Middle Eastern and North African countries. This has improved our ability to export more.”

(On the flip side, hard spring wheat prices have seen a decline — largely because more acres have been planted in North America this year.)

The production news here isn’t as bad as it could have been given the dry conditions in southern Alberta and excessive moisture in other areas.

“My guesstimate is that across the province, you will see close to average yields,” he said, adding that could change in a scenario in which late-maturing crops are hit with early frost or snow.

Penner expects a similar production story nationally.

“The Canadian supplies are going to be roughly the same as they were last year,” he said.

Protein levels are down in American winter wheat, which could be beneficial for farmers here, he added.

As well, there are not big stores of grain sitting on farms and producers are storing canola and have moved out other crops to make room, Penner said.

“There is next to no barley out there, there is next to no oats. Even the wheat supplies are very low. Pea supplies are lower than last year as well. Apart from canola, there is not a lot in the bins right now.”

And that could change, too, said Turner, who says the canola market is overdue for some good news.

“Everyone and their mother knows that the price of canola is really a function of the trade issues with China,” he said. “I would suggest that the market is going to rally between $25 to $40 a tonne.” — With staff files

About the author


Alexis Kienlen

Alexis Kienlen lives in Edmonton and has been writing for Alberta Farmer since 2008. Originally from Saskatoon, Alexis is also the author of two collections of poetry, a biography, and a novel called "Mad Cow."



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