Market Insight: “Feed” wheat market beats CWB

Spot cash bids for domestic “feed” wheat have hit $7.50/bu, surpassing the Canadian
Wheat Board (CWB)’s export price for mid-grade wheats in terms of the net price paid to
farms across the Prairies.

According to the 2007-08 pool return outlook (PRO), which hasn’t changed since May
22, CPS Red wheat is worth $339 per tonne instore Vancouver or the St. Lawrence. This backs
off to $7.45/bu. net to a producer in Saskatchewan using typical deductions of $65/T.

FarmLink Marketing Advisors found domestic buyers this week paying $7.50/bu. for

wheat in Saskatchewan. Non-Board feedgrain pricing is higher in Manitoba and Alberta,
which is typical due to higher consumptive demand in these provinces compared to

In addition to CPS at $339/T instore, winter wheat and soft white spring are also
considered “mid-grades.” This means that depending on the price, they can be marketed
into either the domestic market or through the CWB, and which one is paying the most
changes regularly.

The current PRO, at $330/T for winter wheat and $343/T for SWS,
which also puts them at par or a slight discount to domestic bids, depending on the
specific region of the Prairies a farmer is selling in.

High world wheat prices overall in 2007-08 created a strong pull of wheat into export
channels, reducing the supplies available to domestic bidders, which includes feed buyers
and ethanol plants. Corn, which is the main alternative input for local wheat end users,
has become increasingly expensive lately due to worsening crop prospects in the U.S.

According to FarmLink’s internal price database, which houses all of the values quoted

by a wide range of buyers to marketing advisors working to find the best value for
clients’ crops, many bids for “feed” wheat currently exist across Saskatchewan in the
$4.80-6.80/bu. area, even though there are some companies willing to pay a substantial

— The FarmLink Market Insight was researched and produced by FarmLink Marketing Solutions, a marketing advisory service for Prairie farmers, and is published here with permission of the authors.

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