Tight supply, strong demand boost feed wheat bids

Prairie feed wheat cash bids have advanced in the past month. Firm demand, along with tightness in the cash market has amplified the upward price trend, said an industry participant.

"There is been more feed wheat bids than offers," said Jim Beusekom, an analyst with Market Place Commodities at Lethbridge, Alta.

Some of the strength seen in demand is associated with end users looking for coverage ahead of spring and summer, he said.

Along with stronger demand, tightness in the cash market is also adding toward the firmness in western Canadian feed wheat bids, Beusekom said. Currently, with higher prices in canola, wheat and peas, farmers are not motivated to sell their feed wheat, while waiting for higher prices, he said.

Current spot bids for western feed wheat are going as high as $6.18 per bushel in Saskatchewan, $6.53 in Manitoba and $6.07 in Alberta, according to data from Prairie Ag Hotwire. That’s up anywhere from 33 to 63 cents from this time last month.

In the near term, feed wheat prices across Western Canada should remain strong. Beusekom said values should continue to trend higher, as they usually advance during this time of year. The continuance of reluctant sellers in the market will be supportive toward near-term cash bids, he said.

However, despite the continued strength in feed prices, some factors may move values down. Increased farmer selling, along with a downward trend in commodity prices. would undermine values, he said.

The long-term outlook for feed wheat values for the rest of the 2011-12 marketing year will continue to remain strong. Beusekom sees ongoing tightness in the cash market being supportive toward prices.

However, after July, much of the direction in new-crop bids will depend on quality of the fall harvest and how much grades as feed, he said.

New-crop feed wheat bids across Western Canada range from as high as $5.68 a bushel in Saskatchewan and $5.55 in Alberta to $5.30 in Manitoba, according to Prairie Ag Hotwire.

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