Feed wheat to decline with ample stocks, low demand

The price of feed wheat across the Prairies has been holding steady of late, but according to one analyst, values may be set to decline.

Gerald Snip of Market Place Commodities at Lethbridge, Alta. said there are a number of factors likely to contribute to a drop in values , and one such factor is supply.

“It’s a weather market, and right now things are looking good in terms of seeding, at least here in the southern part of Alberta,” he said.

The latest Statistics Canada seeding intentions reports showed a total of 23.425 million acres are projected to be seeded to wheat in Western Canada this year, a 17 per cent increase from the 19.965 million one year ago.

Prices are lower for deliveries in the future, not only because of the large acreage estimate, but also because there are plenty of stocks on farms, which Snip believes will soon be brought into the market.

“Usually what happens is when guys are busy with the seeding, they don’t want to be interrupted, they want to go full speed ahead to get the crop in the ground,” he said. “Once it’s planted, they start checking out the bins, and if they need more room, they will have to sell. So we could be getting a flush of grain coming into the market fairly soon.”

With producers looking to sell wheat in the near term, some have decided to accept feed-grade prices, even if their product is of good quality.

“There is still a lot of grain that would be acceptable for human consumption that is not getting moved to export destinations, and guys are wanting their bins empty, so they are selling it as feed wheat,” Snip said.

With the season changing to spring and ultimately summer, demand from the cattle sector traditionally goes down, and Snip said this year is no different.

“Feedlots are cutting down numbers (cattle) in the summer, and some smaller outfits will empty completely,” he said. “So there is lower demand there as well.”

Current elevator deliveries for feed wheat are bringing as much as $6.53 per bushel in Manitoba, $5.42 per bushel in Saskatchewan, and $6.50 per bushel in Alberta, according to Prairie Ag Hotwire.

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