Minneapolis spring wheat futures prices on April 10 had almost recovered to their highs of early March, marking an excellent opportunity to consider the Canadian Wheat Board’s fixed price contracts for the 2006 crop.
Parts of the U.S. winter wheat crop have dried out since the rain and snow that fell March 18-20. The forecast this week was for temperatures about 6 C warmer than average and strong, drying winds.
As of April 10, only 41 percent of the U.S. winter wheat crop was rated good to excellent. Last year at the same time, 70 percent claimed that rating.
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Also, the soggy conditions in much of North Dakota have raised concerns about a late start to seeding the spring wheat crop.
Added to these weather worries was a resumption of the commodity price run-up that saw gold top $600 US, hitting a 25 year record, and oil reach $68.74 US in New York.
This attracted more money into commodity funds and some of it found its way into grains.
Also, the United States Department of Agriculture sliced its U.S. wheat ending stocks estimate for 2005-06 by 10 million bushels to 532 million, lending a little support to wheat futures.
Taken together, all this news had driven the Minneapolis December 2006 futures price to $4.45 US per bushel at the close April 10 as this column was written. The price is rare. The last time wheat reached that level was in the spring of 2004 when tight grain supplies, particularly soybeans, had the market on a tear. That strength died as the 2004 crop was seeded and summer weather co-operated, at least in the U.S.
Based on that Minneapolis price, the CWB’s fixed price for 2006-07 CW hard red spring wheat 13.5 percent protein April 10 was $209.46 Cdn per tonne, $13.46 higher than the latest Pool Return Outlook of $196 per tonne.
Remember, the fixed price contract allows you to lock in a price and you get your full payment within 10 days of delivery.
There are a number of details about the fixed price contract that you might need to refresh your memory about. Now is the time to check them at the CWB website or by phoning the board so that you can make a decision about whether signing up a percentage of the 2006 crop is right for you.
Remember, prices can fall suddenly on an improved moisture outlook.
The mere forecast of rain in the southern plains took the December Minneapolis contract from $4.47 March 10 to $4.32 March 13. When the rain materialized the following week, the price dropped to $4.10 by March 28.
