MarketsFarm — Hawkish comments from the chair of the U.S. Federal Reserve and the possible renewal of the Black Sea Grain Initiative brought down wheat futures on the Chicago Board of Trade (CBOT) for the week ended Thursday — and, in turn, pressured western Canadian wheat bids.
In front of the U.S. Senate banking committee on Tuesday, Fed chair Jerome Powell told lawmakers that if the country’s economy continues its strong performance, the Fed may keep raising its key interest rate for the foreseeable future. Meanwhile, the Bank of Canada (BoC) held its key interest rate steady at 4.5 per cent on Wednesday.
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Ukraine and its partners have started talks on renewing the Black Sea Grain Initiative, which is set to expire March 18. While Ukraine will not discuss the deal with Russia directly, Turkey and other partners will. Meanwhile, Poland and Ukraine reached an agreement for Ukrainian grain shipments in Polish ports, which was put into effect on Wednesday.
Australia reported Monday it projects an all-time record wheat crop of 39.19 million tonnes. Also, the U.S. Department of Agriculture held its wheat carryout estimate at 568 million bushels, while reducing global wheat carryout by 0.7 per cent to 267.2 million tonnes.
CWRS (Canada Western Red Spring) prices took a tumble, losing $20.30-$22.20 per tonne, according to price quotes from a cross-section of delivery points compiled by PDQ (Price and Data Quotes). Average prices were between $381.50/tonne in southeastern Saskatchewan and $400.30 in northern Alberta.
Quoted basis levels ranged between $81.80 and $100.50/tonne 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$276.70 to US$290.30/tonne. Currency-adjusted basis levels ranged from US$9.50 to US$23.10 below the futures. If the futures were converted to Canadian dollars, basis levels would be $6.90-$16.70 below the futures.
Meanwhile, CPSR (Canada Prairie Spring Red) prices were also lower, down $13.50-$16.70/tonne. The lowest average bid for CPSR wheat was $396.40/tonne in southeastern Saskatchewan, while the highest average bid was $415.30 in southern Alberta.
Average durum prices were mixed and rangebound, down $4.40 to up $1 per tonne with bids between $454.70 in northeastern Saskatchewan and $464.50 in southern Alberta.
The May spring wheat contract in Minneapolis, off of which most CWRS contracts in Canada are based, was quoted Thursday at US$8.1575 per bushel, 60.5 U.S. cents lower than the previous 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 at US$7.7725/bu., down 48.75 U.S. cents.
The May CBOT wheat contract lost 47 U.S. cents from the previous week at US$6.6575/bu.
The Canadian dollar was weaker, falling 0.93 of a U.S. cent to close at 72.52 U.S. cents on Thursday.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
