Spring Wheat: More about how this year is different   Readers should use the Basic Charts button above to see fresh graphs covering CWRS and CPSR by province.   PCC continues to forecast less than normal harvest pressure and good recovery thereafter. For those readers who follow grain and oilseed futures closely, some might argue that another 3-4 weeks of seasonal weakness would be unjustified, but merchants rarely improve their prices as long as trucks are rolling up the driveway.   Aside from the Seasonal Chart, sloppy prices at this time of year are visible on the Spring Wheat Currency Comparison chart wherein the difference between MGEX futures and CWRS expressed in US dollars (US Basis) widened aggressively between June and September last year. Similarly, the CWRS Basis 8 Year Seasonal indicates how far CWRS pricing is from normal. Even the International Wheat Comparison shows most prices retreating at this time last year. Making matters worse, others will cite the Price Spread: MGEX minus CBOT and argue that high protein Spring Wheat is unwanted these days. How much can they talk prices down?   However, reexamining the same evidence shows that MGEX Spring Wheat seems to have an ironclad bid at US$4.90 going back into 2019. Moreover, in recent weeks, the Alberta Basis suggests that some big buyer is in a real hurry to get things done right now. As for international deliberations, India’s current crops are shaping up to be big, but there are problems in other parts of the world where the next crop does not get harvested until 2021. Even now, news out of South America indicates major Argentinian problems too. As for the Price Spread: MGEX minus CBOT, this rare situation might already be heading back towards a Spring Wheat premium (arrow).   In brief, judging by a 15 Year free-market history of North Dakota DNS quotes, the big improvement in prices might not start for a few more weeks, but signs of strength are already visible. Expect CWRS harvest pressure to be minor this year.

August 26, 2020

Chart analysis and commentary by Harold AGJ Davis