Wheat basis

[farming101]

Something to watch

[makar]

I havent grown a kernel of gradable wheat in three years, wish i could relate.

[malleefarmer]

Aint worked out basis for me locally but $425 on farm 10% aussie dollars less levies or check offs i think you call em about .8%

[farmaholic]

Something else worth noting will be the final CGC grade distribution within the CWRS and CWAD classes. Weber puts out a good pie chart in his newsletter.

After a challenging harvest in a large part of the Prairies the top grade might be a smaller piece of that pie.

CGC harvest sample program started testing for falling number in the spring wheat samples. They will only report if it is at the maximum of the magic number of 360 seconds, considered to be sound(there is a + or - a 20 second margin of error). If it's higher it is not reported, I assume they will report anything below 360 seconds. All our wheat samples tested higher than 360 seconds and weighs up like lead this year, upwards of 10% higher than the standard bushel weight.

Another test they started doing is the fusarium test. They will only report test results between 0.3 and 6.0 ppm(with a + or - 0.2 margin of error) since they believe that is the range within the results will be most accurate. All ours was less tgan 0.3ppm so there was "nothing" to report. I cringe when I think of the variable results we were getting at terminals in the years when the numbers were higher.

Anyone care to give their wild ass guess of the spring wheat high this marketing year, I doubt its behind us already....

[bucket]

farming101

Are you reporting this correctly with a negative basis?

Where is the exchange rate factored into the basis where most call it a positive basis?

Just asking because I get confused easily???

But I think basis is typically negative until the run up that's inevitable...Germany and Australia had small crops...Canada doesn't make a difference because of logistics, etc etc...

[jazz]

Some article I came across says russia is dumping all its exports and will be done before xmas. We should get a pricing signal after that maybe by spring.

I grow only durum so hopefully that market will get a kick in the pants too.

[farming101]

farming101

Are you reporting this correctly with a negative basis?

Where is the exchange rate factored into the basis where most call it a positive basis?

Just asking because I get confused easily???

But I think basis is typically negative until the run up that's inevitable...Germany and Australia had small crops...Canada doesn't make a difference because of logistics, etc etc...

To me, basis has always meant the difference between the futures market value and the actual point in the market where you are going to give up possession (sell) your grain.

HRSW pricing is based off the MGE spring wheat contract, so currency exchange is a factor. This is handled by the graincos by adding an amount(usually positive) to the futures price (quoted in USD/tonne) to get a delivery point price in CAD.

I hope my stating basis as shown in the chart above is not too confusing. It is simply using the midweek price released by Sask Ag and converting everything to CAD funds.

So, this past Wednesday the price released by Sask Ag was $248.55 CAD. MGE Dec contract closed at $5.6925 USD. Exchange was .7597(or thereabouts). Work it all out and you have a basis of -26.7739

This is the best value seen in a long time. I would have to research when the last time was. There are better cash offers out there than 248.55 too.

[bigzee]

Some article I came across says russia is dumping all its exports and will be done before xmas. We should get a pricing signal after that maybe by spring.

I grow only durum so hopefully that market will get a kick in the pants too.

From guys I’ve talked to, they are locking the durum bins till next summer. From prices I’ve seen overseas looks like prices will be going down. There is a lot of carry over from 17, don’t look for a kick to quick.
Scarey times ahead for all commodities.

[bucket]

To me .. basis is the price at the west coast where my grain goes minus the selling price at my local...farmers still pick up the indexed freight rates...so if I am paying to get it to the west coast as part of the basis then the pricing point is the west coast...

A fair basis would probably be minus 45 dollars off west coast prices...

[farming101]

To me .. basis is the price at the west coast where my grain goes minus the selling price at my local...farmers still pick up the indexed freight rates...so if I am paying to get it to the west coast as part of the basis then the pricing point is the west coast...

A fair basis would probably be minus 45 dollars off west coast prices...

I understand that.
However, it is impossible to figure out where your wheat went after you give up possession at the elevator.
It is also impossible to figure out what price your wheat actually fetched on the world market.
Good for reference and for understanding how the export market works.

When we sell wheat for ethanol production it doesn't really matter to me how much it costs to run an ethanol plant or how much they are selling ethanol for. What matters is how many dollars per acre I am getting for the wheat. That's it

[jazz]

The world is obviously favoring low quality wheat over better stuff. Word is millers have been able to work with lower quality stuff to keep costs down.

So why grow high quality stuff just to go to ethanol or pigs in china. Unfortunately, to get the yeild to make wheat work, you have to pour the inputs to it, then you end up creating a higher quality product by default if you get it off in good conditions.

If there was a way to grow 50+ bushel feed wheat without the inputs I would be moving to that market because quality is dead.

[WiltonRanch]

Think the world wanted our quality but the demand was quite elastic when price went too high. Remember being at the Combine to Customer CWB re-education camp. One breath they’re telling us about how good they’re marketing our high quality then tell us foreign buyers would substitute if price too high. Left you wondering later years after the board was gone and protein premiums weakened but general quality improved. Were we being bullshitted all those years about the true demand for high protein?