As the dollar slides, the price of wheat is climbing.
The Jan. 24 Canadian Wheat Board Pool Return Outlook is forecasting
gains of $1 to $4 per tonne in wheat values because of the currency
devaluation.
Durum values are generally rising by up to $4 per tonne.
Feed and designated barley prices did not rise.
Wheat prices move up when the dollar drops because Canadian Wheat Board
sales contracts are generally made in U.S. dollars. When U.S. dollars
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are received from buyers, they are converted into more Canadian dollars
than farmers received when the Canadian dollar was worth more.
“The largest part of the increase (in wheat prices) was the effect of
the dollar,” said wheat board market analyst Dwayne Lee.
Market fundamentals are largely unchanged, the board reported.
A lower than expected U.S. winter wheat acreage bolstered wheat
futures, but price increases were held in check by the slow pace of
U.S. export sales.
No. 1 Canada Western Red Spring wheat with 14.5 percent protein has
risen to $5.93 from $5.88 per bushel, or to $218 from $216 per tonne.
Durum deliveries by U.S. farmers have surged recently, but overseas
demand has held up, keeping prices steady.
No. 1 Canada Western Amber Durum with 14.5 percent protein has risen to
$7.21 per bushel from $7.10 or to $265 per tonne from $261.
Feed barley prices did not increase with the slide of the dollar,
representing an effective price drop. The Australian barley crop was
larger than expected and eastern European barley has been weakening the
export market.
“Feed barley values have fallen a little bit and that’s been offset by
the weaker Canadian dollar,” said Lee.
Two-row malting barley values are unchanged while six-row prices are
slightly lower in the face of light demand.
The wheat, durum and barley markets are likely to remain quiet unless
there are changes in demand, Lee said.
“This time of year demand is the big driver. It’s sort of been routine
and nothing out of the ordinary,” said Lee.
