The global and Canadian wheat markets are looking relatively bearish overall at the start of 2012, and it will take a weather event somewhere in the world to spark a rally in prices, according to the Canadian Wheat Board’s chief for market surveillance.
Bruce Burnett, the CWB’s director of weather and market surveillance with the Canadian Wheat Board, said here Friday during Crop Week that the board was projecting global wheat production to outpace consumption in 2012-13, with world ending stocks rising by four million tonnes, to an estimated 210.9 million.
Looking at Canada specifically, early CWB estimates were forecasting a 500,000-tonne increase in production, to 25.7 million tonnes in 2012-13, with ending stocks rising to 8.044 million, from a projected 7.489 million at the end of 2011-12.
Durum production in the major exporting countries was also expected to rise to 16 million tonnes in 2012-13, from 14 million, with ending stocks holding steady near three million, he said.
The fact world ending stocks weren’t expected to rise should provide some relative support for durum prices relative to spring wheat, Burnett said.
In Canada, durum production was forecast to increase slightly to 4.33 million tonnes in 2012-13, from 4.172 million, with exports also increasing slightly. Canadian durum ending stocks were forecast to dip slightly below one million tonnes in 2012-13, from a projected 1.261 million for 2011-12.
For barley, North American malt barley supplies are relatively tight, but there are expectations for larger crops in Argentina and Australia. Burnett forecast the world barley trade to hold steady in 2012-13, with world ending stocks also holding steady.
Looking at Canada, the CWB predicts an increase in barley production to 8.65 million tonnes in 2012-13, from 7.756 million in 2011-12. Ending stocks were forecast to rise to 1.664 million, from an estimated 1.384 million in 2011-12.
World trade in barley could see some changes if the problems with the Ukrainian winter wheat crop lead to more barley acres being seeded there, Burnett said.
While global economic concerns and generally ample supplies are expected to keep the path of least resistance to the downside in the grains, Burnett said there were a number of possible bullish weather stories to watch.
South America is dry, and the corn crop has already seen some yield loss, he noted. Ukraine is also dry in some areas, while the southern U.S. Plains remain in a drought situation.
In terms of Canadian weather, Burnett said there were also problems with dryness developing in some parts of the Prairies.
While La Nina weather patterns would normally lead to moisture across Western Canada, Burnett said other systems were countering the effects of La Nina.