The birth of the free market for prairie grain hasn’t caused a burst of light to shine on grain prices.
If anything, prairie grain prices have become more mysterious in the months since the CWB monopoly ended.
“They don’t want transparency,” Harold Davis said about most of the large prairie grain companies.
“Their view is that if you’re an existing customer, they’ll give you a price.”
Davis operates Prairie Crop Charts, an online crop price charting service that provides market prices and analysis for all the major prairie crops.
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Davis often finds creative ways to represent prairie crop values, sometimes relying on North Dakota and Montana prices when Canadian prices are unavailable or suspect.
Canadian wheat and barley prices often diverged significantly from U.S. prices when the CWB monopoly was in place, and many observers expected that the price spreads would vanish once the U.S. border opened.
However, Davis said it’s hard to determine the true state of prairie elevator prices because many companies guard those prices. Many elevators won’t give him prices, often those of the major grain companies.
Louis Dreyfus Canada has been open with its prices, but otherwise finding available prices has been sporadic.
Davis said some of this is probably because of the primitive but evolving prairie grain market, with companies gingerly feeling their way from one export sale to the next.
Basis levels and spreads of Canadian grain prices to U.S. futures values are also evolving, with many aberrations appearing.
For instance, some prairie medium protein wheat that is similar to the wheat represented by Kansas City Board of Trade futures has seen basis levels that suggest the grain is being priced as if it has to first be shipped to the Kansas City futures delivery zone, rather than to the export markets where it is actually going.
Davis expects that sort of aberration will likely end soon.
“We’re beginning to see more sophistication in the basis.”
He expects the big grain markets will become more transparent, even if the elevator companies might be more comfortable with less clarity.
“There’s going to be a great harmony in grain prices,” Davis said.
Even though the CWB monopoly never controlled special crops and small acreage crops, their prices have also suffered a lack of transparency on the Canadian side of the border.
Davis said he often has to use North Dakota and Montana prices for crops because Canadian buyers don’t like being too open with what they’re willing to pay.
He hopes all buyers in the post-monopoly world will start to move toward the open pricing common in the United States.
“The Americans always seem to have a price,” said Davis.
