PGI REFERENCE · WHEAT
How to compare Canadian CWRS and U.S. HRW wheat for export: which prices to use, the cost layers to add, and why inland cash is not export parity.
By Trent Klarenbach, BSA AgEc, PAg
Export parity asks whether Canadian wheat is priced to win a sale against a competing origin at the same destination. For high-protein milling wheat, the main competitor is U.S. hard red winter (HRW). The question is not whether CWRS is cheaper on the Prairies. It is whether CWRS is cheaper landed at the buyer's port, for the same quality.
Compare like with like: CWRS FOB Vancouver against HRW FOB U.S. Gulf, in the same currency and on the same date. Inland cash prices, Prairie or Kansas, are not FOB and cannot stand in for them. A regional cash-to-futures relationship is useful context, but it is not parity.
An FOB spread is only the first layer. Real parity needs:
– Ocean freight from each origin to the destination.
– Landed cost at the destination port.
– A protein and specification adjustment, since CWRS 13.5 and HRW 11–12 are not the same product.
– Tender evidence that Canada is actually in the buyer's mix.
When any layer is missing, PGI labels the comparison WARNING — NOT LIVE PARITY and does not score export competitiveness from it.
FOB quotes go stale within days. A discount observed weeks ago tells you direction, not whether the sale is winnable today. PGI scores competitiveness only on same-day or clearly dated comparables.
Black Sea disruption raises the option value of North American protein, but only if it lasts long enough for importers to switch origin. A disruption of days is a futures risk premium. A disruption of weeks can mean real tenders for Canadian wheat.