Several factors, such as COVID-19 and oil conflicts, are causing uncertainty in the wheat markets
Canadian farmers have faced a lot of uncertainly lately and, unfortunately, the wheat markets are also caught in the flux.
While movement has occurred in the wheat markets the last two weeks, Canada hasn’t been a part of this, said Marlene Boersch. She is a managing partner and owner of Mercantile Consulting Ventures Inc. based in Winnipeg, Man.
“Some of that is still resulting from the rail blockade, which blocked shipping for a while. So, we have a backlog that needs to be cleared out, which means people are not buying off farm because they don't need it right now,” she told Farms.com.
Prices have also fallen significantly. When this situation occurs, buyers usually step back because they believe they can wait and get wheat cheaper, explained Boersch.
If farmers have any old crop and can find buyers, Boersch recommended selling now because the prices likely won’t get better. But in terms of new crop, farmers should hold off contracting.
“As far as we are concerned, at these very low levels, we wouldn't be selling new crop. We would be waiting to see how some of the production data comes in. Having said that, we also don't know what the coronavirus affect will be on demand, so maybe that will have to be lowered,” she said.
“I tend to think that people will have to continue to eat and particularly the basic food products. So, I think it would be too early to lower (prices). But there are a number of moving parts for the new crop that give us some hope that things will improve,” said Boersch.
The recent drop in crude oil prices has also affected the wheat market. The crude oil price drop brings down the oilseed market. The wheat market is caught in the decline as well, she said.
With this reduction in crude oil price, fuel prices have also decreased. While this situation brings the Canadian dollar down, farmers will hopefully get a break on fuel prices going into the planting season.
To read Boersch full report on the wheat markets, check out Sask Wheat’s website.
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