Price slip increases wheat’s competitiveness
Canada’s wheat prices, previously the highest among major exporters, have recently become more competitive, according to the USDA. As of August 9, the price for CWRS 13.5% wheat at the Port of Vancouver was US$260 per tonne, down from earlier highs. This price is now mid-range compared to competitors, with Russia at $222 and Australia at $282. Canadian prices fell due to increased competition from U.S. Hard Red Spring wheat and lower spring wheat conditions in Alberta and Saskatchewan. Analysts predict Canadian prices may rise again if demand shifts or supply issues affect competitors.
SASKATOON — Canada’s wheat prices have become more competitive of late, according to the U.S. Department of Agriculture.
They were the highest of all the major exporters from November 2023 through June 2024, but in July and August they dipped down to the middle of the pack, according to the USDA’s recent Grain: World Markets and Trade report.
As of Aug. 9, the price for Canada’s CWRS 13.5 percent wheat at the Port of Vancouver was US$260 per tonne. That compares to the low of $222 set by Russia and the high of $282 by Australia.
Most prices were down from the previous month.
“Canadian quotes dropped $13 per tonne, despite lower spring wheat condition ratings for Alberta and Saskatchewan, with strong competition anticipated from U.S. Hard Red Spring wheat,” the USDA stated in its report.
U.S. quotes fell $12 per tonne with the mounting harvest pressure.
GrainFox chief analyst Neil Townsend said it makes sense that Canada’s values have dipped below competitors Argentina and Australia, who are both at a point in the year where their supplies have dwindled.
“Neither one of them had spectacular crops last year, so their prices might just reflect they’re not trying to sell too much right now,” he said.
The USDA also noted that Australia is facing stiff competition from both North American and Black Sea wheat, amidst lacklustre demand from China.
Townsend believes once Australia and Argentina figure out what they have for new crop supplies, their prices might slide below Canada’s once again.
“Canada will be exporting wheat that has better quality, more protein and overall, a better milling product,” said Townsend.
In the meantime, Canada needs to stay competitive with U.S. wheat values, which have been pressured lower by a good winter wheat crop.
U.S. winter wheat production is forecast at 1.36 billion bushels, up nine percent from last year. U.S. spring wheat production is pegged at 544 million bu., an eight percent improvement.
“That’s probably why Canada has slipped because at this point in time we have to maintain some competitiveness with U.S. values,” he said.
Canada’s harvest is looming. Townsend is forecasting about 30 million tonnes of non-durum wheat production, which is similar to Agriculture Canada’s July estimate of 29.13 million tonnes.
“I’m optimistic that Canada will have a big export program,” he said.
He thinks there is a good chance that Canada will ship out 21 to 22 million tonnes in 2024-25, up from this year’s 20.4 million tonne program.
There might have to be some demand rationing that occurs at some point, driving Canadian prices back up above U.S. values.
Russia continues to set the floor price for the wheat market. Despite harvesting a much smaller crop, the country is still expected to ship out 48 million tonnes, its third biggest export program in history.
Buyers know Russia has plenty of wheat to sell. Egypt recently tendered for 3.8 million tonnes of wheat and passed on nearly all the offers, including Russia’s.
“That would indicate that at least from an Egyptian perspective, the Russian wheat is too expensive,” said Townsend.
European Union wheat was an exception to the rule, rising $7 per tonne due to ongoing production and quality concerns in France.
Townsend worries that it will be tough for global wheat prices to rebound in an environment where corn and soybean prices are also deteriorating with a big U.S. crop on the way.
“Wheat might have been the first one to capitulate and turn south, but now there’s not a big reason for wheat to rally in the current context with the U.S. harvest looming,” he said.
Source Link : https://www.producer.com/markets/price-slip-increases-wheats-competitiveness/
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