New 2008-09 pool return outlooks (PROs) for Prairie wheat, durum and barley are nearly all up from May, based partly on rising corn values, the Canadian Wheat Board reported Thursday.
The board’s June wheat PROs for the 2008-09 crop year are mostly up by $9 or $10 per tonne, with No. 1 Canada Western Red Spring (CWRS, 11.5) up $10 to $338, and No. 1 Canada Western Red Winter (CWRW, Select 11.5) up $9 to $322, the CWB said.
The only exception listed among board crops and grades was for non-select soft white spring wheat (No. 1 CWSWS), which remained at its May PRO level of $288 per tonne.
Spring wheat markets in North America are now supported by U.S. corn prices, spurred by excessive rains, cooler-than-normal temperatures, delayed development of the corn crop and increased abandoned acreage due to flooding, the board said. Events in the U.S. are boosting demand for wheat as livestock feed.
Indicators point to below-average protein from the hard red winter wheat harvest now underway in the U.S., thus supporting prices for higher-protein spring wheat, the board said. Also, recent Statistics Canada numbers indicate an increase of over 550 per cent in soft white spring wheat acres in Western Canada, to 455,000 acres, though it’s uncertain how much will flow to domestic biofuels and how much to export markets.
World wheat production is still forecast to be a new record, up between 40 and 50 million tonnes from 2007 at about 650 million tonnes. Offshore prices are being pressured and customers are generally adopting a hand-to-mouth approach to grain buying, the board said.
The June durum PROs for 2008-09, meanwhile, are up $8 to $10 per tonne from May, with No. 1 Canada Western Amber Durum (CWAD, 11.5) up $8 at $402 and No. 5 CWAD up $10 at $236.
“The durum market continues to incorporate a large risk factor into the price structure due to an uncertain new-crop outlook for both quality and quantity. Most buyers have been reluctant to commit and are taking a wait-and-see approach,” the board wrote.
“However, with old-crop inventories very tight, the market is expecting demand to start ramping up. The durum market is firmer this month as the gap between global durum production and consumption continues to narrow.”
The PRO for the CWB’s Pool A for No. 1 Canada Western (CW) feed barley rose $10 per tonne from May levels to reach $245, while designated barleys (select CW two-row and six-row) were up $6 per tonne at $360 and $340 respectively.
High corn values are supporting feed barley prices, as is the latest StatsCan report, which shows Canada’s barley seeded acres to be down “significantly” in favour of canola and wheat.
Furthermore, “although prospects for a larger European crop continue to weigh on prices, malting barley values in the European Union will remain supported by the fact that carry-in stocks are very low,” the board wrote. More generally, “much uncertainty remains about the size and quality of the 2008-09 barley crop.”
Pool B, 2007-08
The CWB on Thursday also released a 2007-08 PRO for No. 1 CW feed barley in Pool B, showing values unchanged from the previous month at $275 per tonne. The end of the crop year nears and sales for the pool are nearly complete, the CWB said.
“Tight global supply and weak nearby Saudi Arabian demand were the prevailing fundamentals as new-crop supply was anticipated, with expectations of a large European crop in 2008-09,” the CWB wrote.