The new open markets for wheat and durum in Western Canada are still sorting themselves out in the early weeks following the passage of a bill ending the long-standing Canadian Wheat Board single desk for marketing those crops.
Speaking to a meeting of the Saskatchewan Winter Cereals Development Commission during Crop Week in Saskatoon, Brenda Tjaden Lepp of FarmLink Marketing Solutions said the open market could easily take a number of months, if not years, to level out, with more inconsistencies likely in the short term.
Following the passage of Bill C-18 in mid-December, most of the major grain companies started to test the waters with new-crop pricing options. While a transparent open market is expected to be beneficial for farmers in the long run, Tjaden Lepp said the current new-crop prices were lacking consistency.
There were wide discrepancies from company to company in terms of protein and grade spreads, she said, with little patterns to be found in the bids from one delivery point to the next.
The newness of the market aside, wheat pricing may also be more inconsistent compared to crops such as canola due to the increased number of factors end-users are looking for.
"The message is simple: you shop it around," said Tjaden Lepp, noting that in the current environment, one grain company may be offering the same price for a lower-quality wheat than the company down the road.
Going forward, Tjaden Lepp highlighted a number of challenges for marketing wheat under the new system.
It still remained to be seen how the new voluntary CWB will operate alongside the grain companies, she said. A voluntary CWB, she estimated, could continue to sell 20-30 per cent of the western Canadian wheat crop, which means agreements will need to be put in place with the handling companies.
The launch of new wheat and durum futures at ICE Futures Canada on Jan. 23 could help in determining the price direction for wheat and durum in Western Canada.
Tjaden Lepp said it remains to be seen if the ICE contracts will see enough liquidity, or if Canadian wheat will find itself priced off the Minneapolis futures.