Focus On Winnipeg Commodity Exchange Feed Wheat Futures

March feed wheat futures ended the month up at $153.40/tonne, having traded in a relatively narrow range during the last half of January. After reaching similar price levels in early December 2001, the March futures trended downward hitting $147.50/tonne before returning to the recent price levels in mid-January.

Since August 1, 2001, the nearby feed wheat price series has been trending upward, ranging from a low of $131.70/tonne to a high of $153.40/tonne where it ended the month of January. Western barley futures price levels have continued to be above feed wheat futures price levels, ending the month at a $7.80/tonne premium to feed wheat. Since August 1, 2001 the nearby western barley futures premium to the nearby feed wheat futures has ranged from a high of $24.50/tonne to a low of $4.60/tonne.

Statistics Canada released its Stocks of Canadian Grain at December 31, 2001 report on January 31, 2002 which reported that total stocks of wheat (excluding durum) were at their lowest levels since 1988 and barley stocks were at their lowest since 1984. Statistics Canada also reported that wheat is being substituted for barley in hog rations. With relatively low supplies of feed wheat, feed wheat basis levels narrowed significantly in the last few days of January. The best elevator bid in the par region on January 31 was reported at $5.52/tonne under the March futures.

Dry soil conditions in Alberta and Saskatchewan due to last summer's drought and a lack of snow cover this year have been widely reported in the media. Going into the 2002 planting season, if dry conditions persist, weather could play a significant role in determining the acreage of wheat planted. Given the current situation of low stocks and acreage uncertainty, feed wheat may see increased price volatility in the coming months.