AGRIWEEK – July 3 2026
U.S. declines to extend North American trade deal, starting clock to end it while seeking changes.
The Trump administration on July 1 declined to extend the Canada-U.S.-Mexico Agreement, starting a decade-long clock to wind down the trade deal as it seeks changes to try to reshore manufacturing jobs and reduce U.S. trade deficits with its North American neighbours.
The decision, announced after a six-year review of the North American free trade zone, keeps the agreement in place for another 10 years with annual reviews before it expires, unless the three countries agree to renew it with changes, Reuters reported.
“The United States did not agree to renew the (CUSMA) in its current form,” U.S. Trade Representative Jamieson Greer said in a statement. “As a result, the (CUSMA) is not renewed. The United States will continue to engage with Mexico and Canada to address the agreement’s shortcomings and our trade deficits with these countries.”
Greer said the U.S. will proceed with a CUSMA bilateral negotiating round scheduled with Mexico during the week of July 20. A senior administration official said that those talks in Mexico City would focus on strengthening North American rules of origin for autos and other industrial goods and economic security to keep other countries, including China, from benefiting from CUSMA access.
Mexican Economy Minister Marcelo Ebrard told a news conference that Mexico wanted to help address U.S. concerns about job losses and trade deficits, but the U.S. and Mexico remain divided over U.S. demands for stricter regional automotive rules of origin.
“There is no difference that I can identify between Mexico, the United States and Canada that is so big that we cannot resolve it,” said Ebrard, who participated in a virtual meeting on July 1 with Greer and Canada-U.S. Trade Minister Dominic LeBlanc.
“We wouldn’t allow our (auto) industry to be at a disadvantage,” Ebrard said. “I’d say that has been the main point of discussion with the United States in all these talks: protecting our automotive industry.”
LeBlanc added that Canada would continue to work to address U.S. President Donald Trump’s tariffs on Canadian steel, aluminum, autos and lumber.
“We agreed on the importance of continuing our discussions and identifying ways to ensure trade and investment frameworks between Canada, the United States and Mexico continue to support North American prosperity and competitiveness,” he said.
DENIAL LONG EXPECTED
CUSMA was negotiated by Trump’s first administration to strengthen the 1994 North American Free Trade Agreement and underpins a highly integrated regional economy with some $1.6 trillion in annual trilateral trade.
The U.S. decision was widely expected, as Greer said that more time was needed to address problems with CUSMA, including persistent and growing U.S. goods trade deficits with Mexico and Canada that reached $197 billion and $48.3 billion in 2025, respectively.
Much of the deficit with Canada is driven by oil imports, while the deficit with Mexico has grown as companies shifted supply chains away from China in response to U.S. tariffs on Chinese goods.
The senior Trump administration official told reporters that it was still in U.S. interests to come to agreement on possibly separate trade “protocols” with Mexico and Canada “as quickly as possible,” but did not provide an expected time frame.
But the official added that Trump, who has already changed the CUSMA relationship by imposing tariffs of 25 per cent on Mexican and Canadian autos, 50 per cent on metals and 10 per cent on lumber, is likely to remain skeptical of any deal.
Trump has repeatedly said that the U.S. would do better without CUSMA despite launching it in 2020 as “the best agreement we’ve ever made.”
In two rounds of negotiations with Mexico, Trump’s administration has demanded that North American-built vehicles contain 50 per cent U.S. content, pushing the regional total to 82 per cent.
Industry groups, including those representing automakers, have called for continuation of CUSMA as a trilateral deal with duty-free trade to keep U.S. manufacturing competitive against competitors in Asia and Europe.
Farm groups also have been calling for continuation of CUSMA, as Mexico and Canada together purchase more than a third of U.S. agricultural exports.
“(CUSMA) is without a doubt critical to the livelihood of farmers, fishers and rural communities across the country who rely on exports to Mexico and Canada, and to obtain key inputs used in U.S. farming operations,” said Bryan Goodman, a spokesperson for the Agricultural Coalition for USMCA, whose members include corn and soybean growers to distiller and meatpacker groups.
“We are encouraged by the negotiations already underway and urge all three countries to continue making progress towards a renewed and strengthened agreement.”
Commentary
The U.S. had certainly telegraphed their intentions renegotiate some of the terms of the current CUSMA agreement. The July 1, 2026, announcement is merely a formality announcing the beginning of negotiations.
Digital access rules, tariff alignment on Chinese goods and dairy access seem to be the main U.S. areas to renegotiate. The access for U.S. alcohol in the Canadian market is also an issue the U.S. wants looked at. The Canadian position is centred on the tariffs on softwood lumber, aluminum and cars, which are currently subject to 25 per cent tariffs.
This is going to be a long negotiation with two bilateral agreements most likely – one with Mexico and one with Canada. This divide and conquer strategy was used six years ago when the current agreement was negotiated.
The main thing to understand is that the trade deal will be continually renegotiated over the next three years as the current administration tries to extract even more concessions from Canada and Mexico.
A quick conclusion to the negotiations is the most ideal scenario but also the most unlikely. In the new world of continuous negotiation, it will be very important to have almost infinite patience when it comes to these talks. Canadian negotiators need to conclude their talks without significant time pressure entering into the picture. That will lead to the best possible agreement for Canada.
This Week in Agriculture
Canadian farmers plant record canola acres at expense of wheat
Why It Matters: Canadian acreage estimates show that farmers did respond to improved prices for canola by planting a record area. The only question is how much of the area actually was planted and survived the heavy rains over the month of June.
Canadian farmers planted a record amount of land to canola in 2026, with wheat area down on the year, according to the latest principal field crop area report from Statistics Canada released June 30.
Barley, soybean and corn area are also expected to increase, while oats, lentils and dry peas are forecast to decrease, as Phil Franz-Warkentin reported for the Glacier FarmMedia network.
The survey was conducted from mid May through June 12, with adjustments likely in subsequent surveys.
Canola area is forecast to increase by 8.4 per cent on the year at 23.4 million acres. That compares with the March estimate of 21.8 million acres and tops the previous record of 23.0 million acres set in 2017. Statistics Canada cited favourable prices for canola relative to other crops as contributing to the acreage increase. The March survey was also conducted before China lifted tariffs on Canadian canola.
Total Canadian wheat area was expected to be down by 5.9 per cent from 2025, at 25.3 million acres. That fell below average trade estimates, which had ranged from 25.5 million to 26.8 million acres. Durum was down 10.3 per cent on the year at 5.9 million acres, other spring wheat was 3.9 per cent lower at 18.1 million acres, and winter wheat remaining after winterkill was 11.5 per cent lower at 1.4 million acres.
Soybean planting intentions came in at 6.0 million acres, which would be up by 3.1 per cent from 2025. Ontario remains the top growing area for soybeans, although acreage there is expected to decrease by 0.6 per cent on the year at 2.9 million acres.
Meanwhile, Manitoba farmers intend to plant 16.2 per cent more soybeans in 2026, with area forecast at 1.9 million acres.
Barley area is expected to increase by 9.3 per cent on the year to 6.7 million acres. That was up by 300,000 acres from the March estimate but in line with trade expectations.
Oats area is forecast at 2.5 million acres, which would be down by 15.1 per cent from 2025 and below trade estimates.
Canadian farmers expect to plant 4.0 million acres of corn for grain in 2026, up 4.8 per cent from one year earlier. Ontario is forecast to see 2.3 million acres of corn, which would be up 2.7 per cent from 2025. Manitoba farmers reported a record 692,600 acres of corn were planted, an increase of 11.8 per cent.
Most pulse crops are forecast to see lower planted area in 2026, with lentils down 10.9 per cent at 3.9 million acres; peas down 13.7 per cent at 3.0 million acres; edible beans down 20.8 per cent at 337,000 acres; and chickpeas down 1.5 per cent at 533,000 acres.
Health Canada officially clears crop drone sprayers for takeoff
Why It Matters: The new finalized rules provide further regulatory certainty for farmers wanting to apply pesticides via remotely piloted aircraft systems (RPAS, otherwise known as drones), but also acknowledge what we don’t yet know about how these products will travel coming out of drones.
Health Canada has granted final approval to new federal policies for drone spraying of crops just weeks after allowing interim approval.
The new policy allows RPAS to be used to apply pesticides that are already approved for conventional aerial application. It takes effect June 30, wrote Dave Bedard for the GFM network.
Any pesticides not specifically registered for aerial application will thus need a Health Canada-approved label amendment, as per existing chemical registration processes, to be applied by drone — or, where Transport Canada permits it, multi-drone operation (also called swarming).
It follows that any pesticide with a label specifying “do not apply by air” is also prohibited from application by drone, Health Canada added.
Under the new final rules, application using drones will require users to follow all label directions for aerial application, with no changes to spray volume, application rate, droplet size, spray buffer zones or any other label conditions.
That said, the new rules regarding personal protective equipment and safety measures for drone pilots, and rules regarding nozzle placement, will be different from those for conventionally piloted aircraft.
The spraying buffer zones in place for conventional aircraft will remain in place for drones for now, Health Canada said. “Conventional aerial spray buffer zones were chosen as a conservative surrogate for (drones) because drone spray drift is not yet well understood.”
Until drone-specific spray drift models become available to support establishment of drone-specific spray buffer zones, crop chemical registrants can either seek permission for label amendments from Health Canada or wait for new drone-specific spray buffer zones will automatically be added to product labels during regular review.
Health Canada said it’s reviewing studies on the matter, but noted “early results suggest that RPAS drift may be higher than field sprayers and somewhat similar to airblast sprayers, but not close enough to use as a surrogate for RPAS spray buffer zones.”
Along with those buffer zones, pesticide use patterns must also follow products’ existing aerial application directions, including application rates, number of allowable applications and retreatment intervals.
As for spray volume, Health Canada’s drone rule emphasizes it “must not be reduced below the minimum volume required for aerial application on the product label.”
Product rules that can’t be followed due to the specific design of drones, such as nozzle distribution along a spray boom, are not applicable, Health Canada said.
In approving drone use for spraying, Health Canada noted application of pest-management products by conventional aircraft presents several challenges.
“Weather, particularly wind, can cause spray drift and uneven coverage. (Conventional aircraft) also consume large quantities of aviation fuel, increasing operating costs and emissions. Additionally, typical aircraft payloads and spray systems can make precise, low-altitude targeted applications difficult.
“By contrast, (drones) can operate from confined sites, fly lower and slower for greater application precision and reduce fuel use and emissions, making them an easier and more sustainable alternative for many pest-management tasks,” it said
How everyone pays the cost for patents on seeds, and private companies get rich from keeping them secret
The United States is one of only a handful of countries that allows companies to hold patents on plant varieties. As a result, a small number of corporations can — and do — suppress competition in the seed industry, stifle innovation and turn taxpayer subsidies intended for farmers into corporate profits.
In a piece for Reuters’ The Conversation, Julie Dawson, Kiki Hubbard and Paulina Jenney, plant breeding and seed policy researchers from the University of Wisconsin-Madison, wrote about seeing how this plays out. When huge companies assert their patents, smaller businesses and public plant breeders who often lack the legal resources to fight back are frequently dissuaded from conducting research and development that might actually not be illegal at all.
And a lack of competition allows dominant companies — not always based in the U.S. — to collect large sums of taxpayer money that Congress allocated in hopes it would help farmers, not shareholders’ and executives’ bottom lines.
Beginning in the 20th century, governments began to grant companies patents on living organisms, beginning with a genetically engineered bacterium that broke down crude oil. Suddenly, chemical and pharmaceutical companies saw opportunities to earn money by engineering specific traits, such as herbicide tolerance, into key crop plants, including corn, soybeans, cotton and canola, and patenting those varieties.
Then they used those patent rights to prohibit other plant breeders, even university researchers, from conducting research and breeding with their seeds and to forbid farmers from saving their own seeds from one season to the next.
Those steps eliminated seed companies’ two most obvious sources of competition: other developers building on their work and farmers saving seed. The seed companies then had enough market power to set prices so high they took nearly all of farmers’ potential profits, while leaving them just enough of a margin to remain customers.
The result is a system in which public money intended for farmers is redistributed to the seed suppliers and commodity purchasers who profit on either side of them.
Dominant seed companies prevent competitors from developing new breeding programs through a complex web of patents and restrictive licensing contracts that make it nearly impossible to acquire enough genetic material to get started.
Genetic analyses on the protected seeds would be required to understand how a variety was bred and the genetic traits it contains. However, seed companies have also threatened independent researchers with patent-infringement lawsuits. Those threats prevent independent researchers from studying the crops that make up the country’s supply of food, feed, fuel and fibre.
But the May 2026 Justice Department court filing saying seed patents are blocking agricultural competition and research indicates the tide may be turning.
In 2023, multinational agrochemical company Corteva sued a genetic engineering startup, Inari, for infringing its patents by, among other things, obtaining samples of Corteva’s patented seeds from a public repository and analyzing their genetic makeup.
Though the Justice Department didn’t weigh in favour of either company, its court filing said companies should not be able to restrict the public from sequencing genetic material that was deposited as part of the process of securing patent protection.
More competition in the market could provide an important check on seed prices, reducing the burden on American farmers and, thereby, taxpayers. Finally, researchers could conduct the studies that are needed to begin rebuilding the kind of genetic knowledge that was, for most of human history, held in common — an insurance policy in the best interest of us all.
Ontario opens comments on five farm regulation changes
WHY IT MATTERS: The changes are intended to streamline processes and modernize permits and licences to better align with current-day practices.
Ontario has opened comment periods on five proposed regulatory amendments affecting the agricultural sector.
The amendments proposed under the government’s Protect Ontario — Streamline Permission and Approvals project would have an impact on animal health, meat inspection, bee management, farm implement sellers and grain farmer representation, as Diana Martin reported for Farmtario.
Proposed amendments to the Animal Health Act and Drugs and Pharmacies Regulation Act would allow sellers of livestock medicines to register instead of obtaining a license, which would reduce wait times, an Ontario Ministry of Agriculture, Food and Agribusiness (OMAFA) representative told Farmtario.
“Under a registration model, compliance would be verified through inspection, record-keeping, and traceability,” the OMAFA representative clarified in an email. “These changes respond to federal measures that made medically important antimicrobials prescription-only and mean that products sold under Ontario’s framework are lower risk.”
The information, conditions and requirements for operating under the registration model would be similar to the current licence application and conditions.
Additionally, it removes requirements to display proof of licence and adds an automatic termination of registration to sell livestock medicines if a person “ceases to sell livestock medicines for more than a determined period of time (e.g., one year).”
To reduce administrative burdens under O. Reg. 31/05 — Meat under the Food Safety and Quality Act, 2001, the amendment would remove the annual renewal requirement for the examiner certificate for non-emergency on-farm slaughter of pigs and cattle under 30 months of age and the need to apply for an annual renewal.
“OMAFA has determined that the administrative renewal of the certification is not required for the examiner to continue to be competent,” explained the government spokesperson. “In addition, the proposal includes a provision to allow for the automatic termination of a certificate if certain criteria are met.”
The OMAFA spokesperson provided an example, saying that if an examiner does not conduct an examination for more than five years, the certificate would be terminated.
OMAFA said the Bees Act amendments eliminate dormant permits and outdated requirements relating to moving bees or beekeeping equipment into, out of or within an Ontario area of quarantine and buying, selling or transporting beeswax refuse or used honeycomb between April 1 and Dec. 1 in any year.
“Biosecurity and disease control measures, including inspection powers, quarantine authorities, and beekeeper registration, would remain in place under the Bees Act and the Animal Health Act, 2009, to protect bee health and the broader agri-food sector,” said the OMAFA spokesperson.
The Farm Implements Act and Regulation 369 amendment would reduce burdens to businesses by eliminating the requirement for new distributors and new dealers/distributors (a distributor who also offers farm machinery or parts for sale at retail) to register.
“New dealer registrations will be moving to a permit-by-rule, where a dealer will need to notify the government by completing the registration form but will be able to begin operations on the same day,” the OMAFA representative said.
Changes to the Grain Plan would adjust how the District Grain Committee delegates are allocated by moving to a five-year average of production acreage, from the current three-year average. Once the minimum delegates are assigned, the remaining 30 delegates will be distributed based on a district’s true share of total production.
OMAFA said the amendments would “better reflect long-term production patterns and ensure a more accurate and fair representation of farmer-members.”
Delegate numbers would be calculated using Agricorp data yield averages across all crop types, replacing the current regulation using Agricorp’s average annual provincial yield per acre regarding grain corn, soybeans or wheat and Statistics Canada data for oats and barley.
Other proposed changes include reducing required district delegate meetings from four to three per year and instituting a 12-year term limit for Grain Farmers of Ontario board members.
The public comment period on Grain Plan amendments closes July 13, with the livestock medicines, meat examiner certificates and beekeeping comment periods closing July 30 and the Farm Implements Act closing July 31.
Crop Reports:
Manitoba
Parts of Manitoba contended with large amounts of rain during the week ending June 28, with San Clara in the province’s northwest getting 123 millimeters. The Pas received the least at 1.8 mm, the provincial crop report said.
Further to the south, the Assiniboine River was reported to be flooding in some areas. That forced cattle near the river to be relocated.
Spring wheat province-wide was said to be between the tillering and stem elongation stages. While herbicide spraying was largely complete, farmers continued to monitor for diseases, finding what could be tan spot.
Manitoba’s corn moved into the V5 and V6 stages with good stands. However, excess moisture in some areas has led to uneven growth and nutrient stress.
The winter wheat and fall rye were flowering, with hopes for strong yields. Fungicide spraying was finished.
Up to 10 per cent of the canola was already flowering, but the majority of the crop was between the five-leaf and bolting stages. Farmers were scouting for cabbage seed pod weevil, which have been located in large numbers.
Manitoba’s soybeans were in the third to fourth trifoliate stage with the first herbicide mostly applied and some farmers have made a second pass. Where there has been excess water, soybeans have turned yellow. Sunflowers reached the V6 stage.
The peas reached canopy closure in most fields with the crop in the 10 to 12 node stage.
Depending on the region, field conditions are either too wet and caused damages to forages or the rain has greatly improved those crops.
Overall, alfalfa is between 18 to 30 inches with the latter in full flower. Sweet clover has started to flower at 36 inches, and most grasses have headed out at 18 to 24 inches.
The excess moisture has limited the first cut of alfalfa and grass. In some areas, bales have been made and reported to be quality.
Alberta
Crop ratings in Alberta edged up one point during the week ending June 23, with major crops at 69 per cent good to excellent, as reported by the provincial agriculture department. That’s also one point above the five-year average.
However, the province’s farmers continued to struggle spraying their crops due to showers, winds and wet fields. In the meantime, they are concerned about weed and fungicide pressures.
By region, central Alberta ranked the best at 87 per cent good to excellent, followed by the south at 84 per cent, the Peace at 62 per cent, the northeast at 59 per cent and the northwest at 41 per cent.
By crop, provincially the dry peas led at 79 per cent good to excellent, then barley at 74 per cent, spring wheat at 72 per cent, canola at 63 per cent and oats at 57 per cent.
As for surface soil conditions, Alberta was 75 per cent good to excellent plus nine per cent excessive. Most of that came in the province’s north.
Miscellany
More water allocated for southern Alberta farmers
The St. Mary River Irrigation District in southern Alberta raised its water allocation for its users to 16 inches at the farm gate for the 2026 irrigation season, up from the 14 inches decided in March and up from eight inches during the drought of 2024.
A wet month of June has brought continued moisture to irrigated fields and rain remains in the forecast across southern Alberta, wrote Greg Price for Alberta Farmer Express. The St. Mary Headworks Reservoirs in Waterton, St. Mary and Ridge are sitting at 97 per cent of its Irrigation Storage Full Supply Limit with 471,000 acre-feet of storage.
India falls behind in summer crop plantings
A slow start to India’s monsoon season has led to below-average rainfall and delays in planting rice, corn and soybeans. India accounts for 40 per cent of the world’s rice shipments.
As Reuters reported, the monsoon reached the southern state of Kerala three days later than expected, while western farming regions had to wait two weeks for substantial rainfall. The country has received 42 per cent less rainfall than normal since June 1.
Farmers have planted 18.27 million hectares of summer crops as of June 25, 23 per cent less than last year, said the Ministry of Agriculture and Farmers’ Welfare. Rice area declined from 3.44 million hectares to 2.58 million this year. Soybean acres were down 65 per cent at 692,000, corn was down 16 per cent at 1.57 million, cotton was down 35 per cent at 2.97 million and sugar cane was up 1.2 per cent at 5.7 million.
Monette land for sale
Land owned by Darrel Monette and his companies in Saskatchewan and Manitoba was put on the selling block on June 29.
Monette owns 284,000 acres and leases 172,000 more in Canada and the United States. However, he owes a syndicate of lenders led by the Bank of Nova Scotia about C$920 million, as Karen Briere reported for the Western Producer.
The sales and investment process was approved by an Alberta court earlier this month. Monette’s properties in British Columbia will be listed on the week of July 6. Monette will keep his land in Alberta and other unsold properties as long as his debt is satisfied, said Monette Farms’ legal counsel David Kemp. The appraised value of Monette’s land is C$1.04 billion, of which C$725 million is restricted land in Saskatchewan and Manitoba. Court-appointed monitor FTI Consulting is conducting the sale.
Russian wheat crop to be largest since 2022-23
Commodity data firm Argus raised its forecast for 2026-27 Russian wheat production to 91.2 million tonnes, up from its 88.7 million-tonne estimate from April and the 2025-26 harvest of 90.4 million. If realized, it would be the largest crop since 96 million tonnes were produced in 2022-23, Reuters reported.
A virtual crop tour showed stronger winter wheat prospects as harvesting begun. Winter wheat totals are expected to recover from the drought-stricken past two growing seasons at 69.1 million tonnes. However, spring wheat output is expected to decline to its lowest level since 2019-20 at 22 million tonnes, down from 29.3 million the year before.
China plays big role in barley demand
The Canadian Grain Commission reported that 3.08 million tonnes of barley were exported during the 2025-26 marketing year as of May 31, just shy of the 3.9 million forecast by Agriculture Canada, which would be the second-largest total since 2000.
As columnist D’Arce McMillan wrote for the Western Producer, Statistics Canada’s April export report showed 2.85 million tonnes of barley were exported during the marketing year with 1.74 million going to China. Analysts are looking at statistics indicating that China is using more corn than it produces and imports, which could result in increased feed grain demand.
The U.S. Department of Agriculture projected Chinese grain stocks for 2026-27 at 166 million tonnes. While stocks will be consumed at a high rate, China’s pig herd is shrinking to manageable levels, and the country is developing high-yielding genetically modified corn.
Weekly Markets
The Canadian dollar stabilized this week with the loonie closing at 70.37 U.S. cents. The U.S. dollar was stronger this last week with the index currently trading at 101.84 points.
Crude oil futures continued to trend lower this week as the Strait of Hormuz reopened with the nearby August contract trading at US$68.04 per barrel. Weakness in crude oil drove soybean oil futures lower with the nearby contact trading at US$66.31 cents per pound. Soybean futures gained 16 cents per bushel during the past week, Soymeal futures also posted gains with the nearby contract up by US$4.70 per short ton during the week.
ICE canola futures were also under pressure from crude oil this past week with the November contract trading down by C$9.00 per tonne. Cash canola markets were mixed with values dropping by C$7.45 to C$26.03 per tonne depending on location.
Minneapolis wheat futures posted small gains last week of four cents per bushel. Chicago wheat futures closed the week up by three cent per bushel while Kansas City futures gained by nine cents per bushel. Spring wheat cash prices in Western Canada posted strong gains of C$4.54 to C$9.52 per tonne.
September corn futures gained seven cents per bushel during the past week. Oat futures posted modest gains of nine cents per bushel during the week. Cash oat prices in central Saskatchewan were unchanged during this week.
Cattle futures posted losses last week and closed the week down by US$4.70 per hundredweight. Feeder cattle futures also pushed lower with losses of US$8.78 per cwt. during the past week. Nearby hog futures closed down by a modest US$0.50 per cwt. during the past week.
Charts and tables
Weekly Chicago July Corn Futures
Weekly Chicago July Wheat Futures
Weekly Minneapolis July Wheat Futures
Weekly Kansas City July Wheat Futures
Weekly Chicago Soybeans July Futures
Weekly ICE Canola July Futures
Editorial
Wheat protein premiums remain poor
Protein spreads for wheat continue to be upside down with the price for spring wheat significantly below the HRW. This is true for both futures and cash export prices. This situation is likely to persist well into the 2026-27 marketing year.
The spread between the September Minneapolis and Kansas City contracts is currently trading at a 14.5 U.S. cent discount for spring wheat. Spring wheat futures have been trading at a discount to Kansas City futures since the middle of June despite the ongoing harvest in the U.S. Southern Plains.
Harvest pressure should be pushing Kansas City lower, but the small size of the crop is keeping the downside movement to a minimum. The harvest in the main HRW producing state of Kansas is 72 per cent complete as of June 29, which is 20 per cent ahead of the five-year average. Harvest pressure will drop rapidly as the harvest advances northward from Kansas into Nebraska and South Dakota.
Protein continues to be undervalued by the market as the spread between Minneapolis and Kansas City futures reflects the relative value of protein in the marketplace. The futures market is indicating that the guaranteed protein content of the Minneapolis contract not of any value.
The main reason for the difference in the spreads between HRS and HRW wheat classes is the large drop in HRW this year. The latest USDA report reduced HRW production by three per cent to 497 million bushels. The was an 18-million-bushel reduction in HRW output from the initial estimate in May. This is the first time that HRW production has dropped below 500 million bushels in more than 50 years.
Cash spreads at the PNW are also reflecting the lack of premiums for protein content. Spring wheat cash quotes for September HRS 14 per cent protein were US$269 per tonne last week. The HRW quote at the PNW for HRW 11.5 per cent protein was US$8 per tonne above HRS at US$277 per tonne. In other words, buyers wanting to purchase HRW 11.5 per cent protein wheat will pay more money for 2.5 per cent less protein. That makes no sense.
On the positive side, HRS in the PNW and CWRS in Vancouver will be very competitive in the 2026-27 crop year. Last year at this time HRS was priced between US$30 to US$35 per tonne more expensive than HRW 11.5 per cent protein wheat. Most customers will not choose to buy the more expensive HRW wheat and will substitute higher protein HRS instead. This price advantage for HRS wheat should result in a normalization of the protein spreads later in the marketing year.
If you were expecting significant premiums for protein this year, then you are likely going to be disappointed.
