When it comes to supply and demand for wheat, demand has outstripped supply for the past couple of years.
Chuck Penner with LeftField Commodity Research says with the strength in demand, we've seen an increase in prices.
The price rally was accelerated by the drought and most recently by the war in Ukraine.
In terms of major exporters, he says, Canada bounced back while there was a drop from other key exporters.
"If you look at just the stocks themselves, it's the lowest since 2016/17, and if you look at it as the days of use, it's the lowest since 2014/15. Now, as you may know, China accounts for over half of those global wheat stocks. China's really not a player in terms of an exporter. The other thing is, we really don't know if those stocks exist, how large they are, or what quality they are, all of those types of things. So if you strip China's stocks out of that, the picture looks even more friendly, if you want to call it that. "
Stats show that in the last year, global wheat ending stocks are down 11 and a half million tonnes, aside from China, so it's a situation that's getting tighter.
He says despite tighter stocks, the wheat market has come down in the last couple weeks.
"People get complacent about the wheat market. Frankly, it's overshadowed by the corn and soybean markets, particularly in the US. So, in my mind this is the true picture. We'll see the prices and the futures start to reflect that more as we move forward. Just in terms of the Canadian picture, we bounced back pretty significantly. The crop itself was 11per cent higher than the five year average. And actually, Prairie Spring Wheat, just for this year was up 50 per cent."
Farmers have been delivering wheat this year at a record pace, which means it's going to have to start slowing down moving forward.
Penner feels Canada's wheat ending stocks at the end of 2023 will be as low as they were at the end of the drought year, adding that should mean some strength in futures and basis as we go into the spring.
"We think Canadian spring wheat acres are going to be up this year. We think there's room for it to go up, you know maybe four or five per cent.
Overall, while Penner wouldn't speculate on price expectations going forward for wheat, he feels the bottom line sounds friendly.
Penner also gave the market outlook presentations for durum, pulses, flax, canola and barley.
We'll have more from those presentations in the days ahead.
You can hear part of his presentation in the Prairie Ag Wire audio below.