Elevator bids higher in northern U.S. | Increasing price spread increases viability of sales to U.S.
Spring wheat bids at southern Manitoba elevators plummeted to $5 per bushel from $6 per bu. over the last several weeks.
As a result, a senior market adviser with Agri-Trend is advising his clients to ship wheat to North Dakota elevators, where spring wheat bids on Dec. 13 were $6.30 US per bu.
“We’ve been doing it two ways. We’ve had guys trucking it across to elevators, 20 to 40 miles (30 to 60 kilometres) into North Dakota,” said Brian Voth. “We’ve also been loading producer cars and shipping them down to the States.”
Voth, who works in St. Agathe, Man., said it’s difficult to estimate how much spring wheat has been shipped but his clients have trucked 50,000 to 100,000 bu.
Voth also co-ordinated a shipment by rail.
“We did a 25 car run, which would be 2,300 tonnes or something like that.”
As an example of the price differential, Voth said an elevator near Winkler, Man., was bidding $5.09 for spring wheat Dec. 12, while an elevator in Park River, N.D. was bidding $6.35 per bu. that same day.
“Then you’ve got to factor the dollar (exchange) into that. Which brings you closer to $6.80 Canadian,” Voth said.
Marvin Mills, a farm and grain marketing adviser with FarmLink Marketing Solutions in Boissevain, Man., said he hasn’t heard of area farmers shipping wheat to North Dakota.
“I spoke with a couple of elevator managers across the line and they haven’t seen a lot of that, yet,” Mills said.
Spot wheat bids in southwestern Manitoba were $5 per bu. Dec. 16, he added.
“It hasn’t been a real option until now, with the dollar weakening and the basis levels getting wider…. That spread has just happened in the last four weeks.”
Spring wheat bids were $6 per bu. in southwestern Manitoba earlier this fall and $6.20 across the border.
Mills said the current basis gap might persist because spring flooding hammered crops in north-central North Dakota.
“South of us, they only had half their crop seeded. They (elevators) may be looking for bushels to handle, come later on.”
Curtis Miller, a FarmLink Marketing Solutions adviser in Avonlea, Sask., said spring wheat bids in southern Saskatchewan were around $4.50 per bu. in mid-December. The Cargill elevator in Congress, Sask., was bidding $4.64 per bu. for red spring wheat Dec. 16.
In comparison, U.S. Department of Agriculture data shows Dec. 13 spring wheat bids in northeastern Montana were $5.63 to $5.88 US for 13 percent protein and $6.23 to $6.48 for 14 percent protein.
Marlene Boersch of Mercantile Consulting Venture in Winnipeg, said the basis gap between North Dakota and Manitoba elevators approached $2 per bu. this fall.
“Depending on the quality … over the fall we have seen anywhere from $1.30 to a high of $1.80.”
It’s possible prices will remain higher at U.S. elevators, considering the glut of grain on the Prairies.
“If the Statistics Canada numbers are correct, there’s no way we can export this crop,” Boersch said.
“Companies pick and choose what they are going to take and the threat of a very big carryover will have an impact, invariably, on the basis.”
Miller said the lower Canadian prices should be a strong signal to growers, but some aren’t listening.
“All the terminals who have lowered prices are trying to tell farmers to quit selling to them,” he said.
“For the … farmer who didn’t really have a marketing plan in place … now he needs to pay off that crop input bill or needs some cash flow. He has no choice but to sell.”