‘Buyer resistance’ pressures durum in January PRO

Values for durum wheat have slipped farthest back in this month’s pool return outlook (PRO) from the Canadian Wheat Board, thanks largely to "buyer resistance" against high durum prices.

Durum values in the January 2011-12 PRO, released Thursday, are down $2-$11 per tonne from December levels, while other wheats vary from $5 per tonne higher to $3 lower. Feed barley values are flat, while malting barley values are down $1 per tonne from last month.

Price prospects going forward for durum remain "weighed down, in part, by the ability of demand to hold out until early-season 2012-13 production comes on line" in the second quarter of this year from producers such as Mexico, North Africa and the U.S. desert region, the CWB said Thursday.

The world durum trade for 2011-12, apart from semolina, is estimated at 6.7 million tonnes, compared to 7.3 million tonnes last year — and the decrease in global demand has "more than offset" a production shortfall from the U.S., the board said.

The PRO value slipped farthest for No. 3 Canada Western amber durum (CWAD), with down $11 per tonne at $307 ($8.36 a bushel). High-protein No. 1 CWAD (14.5 per cent) was down $10 per tonne at $353 ($9.61/bu.); No. 4 CWAD was down just $2, at $257 per tonne, while No. 5 CWAD was up $1 at $207.

Wheats

"There are short-term reasons to be optimistic about the wheat market but, in general, wheat fundamentals paint a fairly negative picture," the CWB said Thursday.

Weather conditions in South America’s corn- and soybean-growing areas have built some strength into the corn market, which in turn directly affects the wheat market. As well, markets are beginning to take note of potential production in the Northern Hemisphere in 2012-13.

"Legitimate concerns regarding Ukraine winter wheat conditions and western Canadian snow pack issues have provided the market with ammunition to build a ‘wheat’ story," the board said.

However, "highlighting 2012-13 production potential returns the focus back to the fact that the world has irrefutably produced a record wheat crop in 2011-12."

The PRO value for high-protein (14.5 per cent) No. 1 CW red spring (CWRS) is up $5 from December, at $318 per tonne ($8.65/bu.), while No. 1 CWRS (13.5 per cent) is up just $2, at $307. No. 3 CWRS is down $3 per tonne, at $237, while No. 4 CWRS is flat at $217.

No. 1 CW red winter (CWRW), at 11 per cent protein, is flat at $241 per tonne ($6.56/bu.); No. 1 CW soft white spring is up $4, at $237, while CW Feed is up $1, at $207.

The board said it has so far priced about 57 per cent of its expected 2011-12 crop year deliveries of wheat, and expects to have priced about 75 per cent by the end of March.

Barleys

Strengthening feed barley values in the Black Sea, European Union and Australia, along with "intermittent" demand from the Middle East, have led to a firming of international feed barley values in January, the CWB said. The global coarse grain situation is forecast to loosen in the next production cycle, however, pressuring feed values. No. 1 CW feed barley (Pool A) is flat at $229 per tonne ($4.99/bu.) in Thursday’s PRO.

International malting barley values have been "relatively flat" since the December PRO, the board said. No shortage of malting barley is expected from harvests in Australia or Argentina and "ample" supplies are available, reducing the upside price potential.

In Europe, however, the EU-27 is reportedly looking to pick up malting barley supplies to help pad stocks. "A poor growing season in Europe resulted in domestic supplies that in many cases could not make quality specs that maltsters were comfortable using," the CWB said.

Market conditions leave Select CW two-row and six-row malting barley both down $1 per tonne in Thursday’s PRO, at $313 and $297 ($6.81 and $6.47/bu.) respectively.

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