Tyler Russell, manager of Cargill’s market adviser team, suggests farmers do U.S. dollar to U.S. dollar comparisons when tracking American wheat futures, Canadian cash prices and basis.
Having the numbers all in one currency provide numbers that can be charted over time to create local historical averages for any elevator point.
Russell said farmers who compare company to company or elevator to elevator prices must remember to ensure they are comparing the same “base grades” of wheat because companies use different base grade.
Read Also
China’s grain imports have slumped big-time
China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
By calculating their own basis, farmers will avoid confusion created by company websites that subtract Canadian cash prices from American futures prices, a misleading calculation that sometimes produces apparently positive basis levels.
“We don’t want people to (have the idea that) wheat basises are only good when they’re positive because if the Canadian dollar goes back to US 88 or 90 cents, you may never see a positive basis level again,” said Russell.
“If the Canadian dollar was to continue lower to 75 or 74, you might be seeing basis levels always positive a dollar a bushel. It’s all realized on the Canadian dollar and has nothing to do with the market.”
