MarketsFarm — Russia’s ongoing invasion of Ukraine has not only sparked a conflict between two of the world’s major wheat exporters, but also limit-up price rallies for wheat futures during the week ended Thursday.
As sanctions grow against Russia, as well as uncertainty over access to Ukrainian ports on the Black Sea, fears of a wheat supply shortage are growing and they have translated into price hikes on the futures market.
Winter wheat contract limits have expanded to 75 U.S. cents per bushel, while spring wheat prices have risen limit-up 60 U.S. cents/bu. on some days during the week. A lack of moisture in wheat-growing regions of the U.S. southern Plains has also contributed to higher wheat prices.
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Canada Western Red Spring (CWRS, 13.5 per cent protein) wheat prices jumped $34.90-$41.40 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $475.30 in southeastern Saskatchewan to $498 in northern Alberta.
Quoted basis levels ranged from between $64.40 and $87.10 above the futures when using the grain company methodology of quoting the basis as the difference between U.S. dollar-denominated futures and Canadian dollar cash bids.
Accounting for exchange rates and adjusting Canadian prices to U.S. dollars, CWRS bids were from US$375.30 to US$393.20 per tonne. Currency-adjusted basis levels ranged from US$17.70 to US$35.60 below the futures. If the futures were converted to Canadian dollars, basis levels would be $14-$28.10 below the futures.
Average Canada Prairie Spring Red (CPSR, 11.5 per cent protein) wheat prices gained $3.70-$12.30 per tonne. The lowest average bid for CPSR was $425.10 in southeastern Saskatchewan; the highest was $448.80 in northern Alberta.
Meanwhile, average Canada Western Amber Durum (CWAD) wheat prices were mixed, from losing 90 cents to gaining $2.70 per tonne, with bids ranging from $566.60 in southern Alberta to $581.90 in northeastern Saskatchewan.
The May spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted Thursday at US$11.1825 per bushel, up 98 U.S. cents on the week.
Kansas City hard red winter wheat futures, traded in Chicago, are more closely linked to CPSR in Canada. The May K.C. wheat contract was quoted Thursday at US$11.5025, up US$1.8425.
The May Chicago Board of Trade wheat contract skyrocketed US$1.9925 from the previous week, closing Thursday at US$11.34.
The Canadian dollar gained 1.03 U.S. cents from the previous week, to close at 78.96 U.S. cents on Thursday.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
