You might notice a change in our grain price charts this week.
For one thing, they are in color, which is a nice improvement, but the real change is in the wheat, canola and flax price graphs.
Previously, we were running the Thunder Bay domestic asking price for No. 1 CWRS wheat 13.5 percent protein, No. 1 extra strong wheat and feed wheat.
The Canadian Wheat Board recently suspended publishing a domestic price for these wheat types. The domestic price has been based on the Minneapolis Grain Exchange futures price.
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But the board says that due to congestion at the delivery elevators, the Minneapolis price does not reflect the true market value of the grain. So, for as long as the congestion continues, the CWB will not publish a price.
However, it continues to publish its export asking price basis the St. Lawrence and we have provided a graph depicting it this week.
The rejigging of the charts also afforded us a chance to rethink the information we have been providing.
Starting this week we will begin graphing the basis price for canola and flax.
For a long time we have provided the cash canola price in the par region around Saskatoon. This was based on the Friday nearby month futures price on the Winnipeg Commodity Exchange, minus the best basis quote.
However, we did not chart the basis. It represents the carrying cost of storage and interest, transportation and handling and the grain buyer’s margin, or profit.
The basis is the signal for when to deliver. When the grain buyer has plenty of supply on hand and does not want to deliver, he widens the margin. When there is an urgent need for grain to meet a contract or supply a processor, the basis narrows.
Last crop year, the par region basis roughly ranged from a weak -$24 in December to a strong +$6 just before the end of the crop year when there was a shortage of product in grain companies’ hands.
Good grain marketing strategies take into account the basis and the futures price when deciding whether to sell or store grain, buy or sell futures or buy puts or calls.
The basis we are charting is provided by the Winnipeg exchange and is the best basis reported in the par region on the Friday before publishing, or Thursday if Friday is a holiday.
Our flax cash and basis prices are from the same source. The flax par region is south-central Manitoba.
Our basis charts will show the market’s general direction but remember, the basis at each delivery point is different so you have to phone your grain buyer to get the most accurate quote.
