While spring wheat prices in Western Canada enjoyed a strong year, durum prices weren’t so lucky. Heading into 2019, spring wheat prices could fall victim to increasing global wheat acreage, while durum prices will need to see acreage fall.
When looking at data from the PDQ (Price and Data Quotes) Canadian Western Red Spring (13.5 per cent CWRS) wheat prices started 2018 around C$243 per tonne and finished it at about C$257 per tonne. Canadian Prairie Red Spring (CPRS) wheat bids started the year around C$188 per tonne, and by the end of it were about C$232 per tonne. Durum prices in Western Canada started out around C$265 per tonne and dropped to around C$226 per tonne by the end of the year.
“This has been actually a relatively good time in my opinion for the wheat market for the Canadian grower,” said Mike Jubinville of ProFarmer Canada in Winnipeg, Man.
A variety of factors influenced wheat prices in Canada. In the United States futures markets, Kansas City hard red winter wheat futures rose which was supportive for CPSR prices. The Canadian dollar also weakened over the course of the year, which was supportive for CWRS and CPRS prices.
CWRS prices however varied from the U.S. futures. While Minneapolis spring wheat contracts weakened over the course of the year, CWRS prices didn’t follow suite. The durum market also didn’t find itself getting any support from the weaker Canadian dollar.
Internationally, many factors influenced wheat prices. Droughts throughout northern Europe, eastern Europe and in Australia, hampered global wheat production and was supportive for North American markets.
“In the general global wheat environment this was probably the first year in the last four or five where we have arrested the trend towards higher world wheat ending stocks that have been steadily accumulating for multi-years going on,” Jubinville said.
According to Jubinville, internationally Canada has set itself up as the go to place for higher protein, higher quality wheats, which has led to good global demand for Canadian wheat. According to data from the Canadian Grain Commission, for the 2018-19 crop year Canada had exported 6,901,100 tonnes as of Dec. 9, which is more than last year’s 5,819,600 tonnes.
While exports are up for Canada, Russia has also seen exports rise. Over the course of the last few years Russia has set itself up as the global wheat export powerhouse. However, Russia’s crop was smaller for the 2018-19 crop year and the last quarter of 2018 was full of musings about just when Russia would finally have to scale back its export pace.
In the durum market, it continued to be hampered by global trade issues. Italy, one of the world’s largest durum markets, has slowed down on importing Canadian durum as rumours spread throughout the country it has too high glyphosate residue on it. While in the northern Mediterranean region had, they had experienced good durum crops in 2018, meaning they haven’t needed to import as much this year.
“There definitely is no shortage of durum in the world right now. And we have to go through some kind of process (of) sending the message that we need fewer, not more durum acres, and that’s just going to take time,” Jubinville said.
Heading into 2019, Jubinville doesn’t expect the durum market to change its course any time soon unless Canadian farmers plant less durum. Jerry Klassen, manager of Canadian operations with Swiss-based GAP SA Grains and Products in Winnipeg. expects durum acres to decrease, which will then lead to an uptick in prices.
“Once we get into April, May, June you will probably see the durum start to percolate higher. We’ll have lower acreage and the durum market is going to be very sensitive to North American weather next year,” Klassen said.
However, both do expect spring wheat prices will see pressure in the New Year. Estimates are already pegging large global wheat acres as more look to capitalize on the higher prices.
“Once you get through March, I think the focus starts to (be on) the year-over-year increase in overall world wheat production from the northern hemisphere…and you’ll probably see some pressure on prices,” Klassen said.
Jubinville is recommending producers lock in new crops bids already if they can. With prices mostly near the C$6.50 to C$7 per bushel mark, Jubinville thinks producers should be thinking ahead.
“I would be inclined to start considering doing some forward pricing. Because if big crops come online next year, I can tell you these prices are going to be long gone,” he said.