The world’s durum wheat buyers appear set on "rationing" demand as long as possible, pushing durum values down by as much as $22 per tonne in the Canadian Wheat Board’s latest pool return outlook (PRO).
World wheat and barley supplies also weighed on prices in the CWB’s latest PRO, released Thursday, with milling wheat prices mostly down by as much as $5 per tonne, malting barley down $4 and Pool A feed barley down $3.
"Like last month, world durum prices have been negatively impacted by buyer resistance to the high-priced regime," the CWB said in its PRO commentary Thursday.
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Weather in the northern U.S. Plains bit hard into U.S. durum production and "buyers have resolved to ration their demand in the 2011-12 marketing year," the board said.
Furthermore, the board said, "price prospects going forward are weighed down, in part, by the ability of demand to hold out until early season 2012-13 production comes on line" in the second half of 2012 from the southern U.S., Mexico and North Africa.
While lower-grade No. 5 Canada Western Amber durum (CWAD), at $206 per tonne, is down just $1 from the November PRO, No. 3 CWAD (13 per cent protein) is down $22, at $325. High-protein No. 1 CWAD (14.5 per cent) is down $18, at $363 per tonne.
Looking at milling wheat values, the board noted the U.S. Department of Agriculture’s recent world agricultural supply and demand estimates (WASDE), estimating 2011-12 world wheat production at 689 million tonnes, for the largest production estimate of all time, representing the biggest world production on record.
Competition for export share remains "elevated," the CWB said, and "going forward, the abundant production and stocks are not supportive of the current futures levels without some outside assistance from the broader agricultural complex or from the economy."
High-protein No. 1 CW red spring (CWRS) wheat (14.5 per cent protein) held flat at $313 per tonne in the December PRO, while No. 1 CWRS (13.5 per cent) rose $1 per tonne from November levels, to $305. No. 4 CWRS slipped $5, to $217. No. 1 CW red winter (11 per cent protein) dropped $2, to $241 per tonne.
The CWB said Thursday it has priced about 46 per cent of the expected 2011-12 deliveries of wheat, and expects that level to hit about 50 per cent by the end of the month.
Barley
Expecting new supplies of malting barley soon from Argentina, where the cereal harvest is underway, and a "decent" quality breakdown in Australia’s barley crop but with "very low" protein levels across the country, the CWB sees prices continuing to decline as those countries aggressively court key markets such as China.
Western Canada’s malting barley crop, meanwhile, shows a "good" quality profile with lower-than-average protein, while the U.S. shows reduced supplies due to smaller production and a "poor quality" six-row crop. "Additional U.S. demand is expected into the spring, as maltsters make use of domestic supplies first," the CWB said.
Weaker values in the export market for feed barley, meanwhile, will make further international feed barley sales from Western Canada unlikely, as both strong domestic feed values and a small overall crop in the region provide "domestic marketing opportunities" for producers.
Select CW two-row and six-row malting barley are both down $4 per tonne in the December PRO, at $314 and $298 respectively. No. 1 CW feed barley (Pool A) is down $3 at $229, while Pool B feed barley is up $1 at $223.
The CWB’s next 2011-12 PRO is due out Jan. 26.
