Grain values drop in 2010-11, 2009-10 PROs

“Burdensome” supplies have pressured wheat, durum and barley values down in the Canadian Wheat Board’s latest pool return outlooks (PROs) for both the 2010-11 and 2009-10 crop years.

The CWB on Thursday marked down its March 2010-11 PROs for milling wheat values by $14-$16 per tonne from February values, with No. 1 Canada Western Red Spring (CWRS), 14.5 per cent protein, down $14 at $231 per tonne ($6.29 per bushel).

Most other milling wheats dropped by $14 per tonne, while No. 1 CW soft white spring (CWSWS) dropped $16, to $179 per tonne. CW Feed wheat dropped $14, to $145 per tonne ($3.95/bu.).

“Although wheat production is expected to decline in 2010-11, the current forecast calls for ending stocks to increase by an additional 10 to 15 million tonnes year-on-year,” the CWB said in its outlook Thursday.

The strong Canadian dollar still has a “direct negative impact” on farm-gate returns, the CWB said, while the U.S. dollar also remains “relatively strong” against the euro, boosting the competitiveness of European wheat.

The CWB noted it has no grain priced yet for expected 2010-11 deliveries of wheat, and expects the wheat pricing level to reach about 25 per cent by the end of September.

Durum values in the March 2010-11 PRO dropped by $10-$14 per tonne from February levels, with No. 1 CW amber durum (CWAD), 14.5 per cent protein, down $10 at $192 per tonne ($5.23/bu). Most other durum grades also dropped by $10, while No. 5 CWAD dropped $14, to $145 per tonne ($3.95/bu.).

Durum stocks of the major exporters in 2009-10 are now forecast to reach 4.8 million tonnes, the largest level since 2005-06, the CWB said. “These supplies and additional anticipated production will continue to pressure prices in the upcoming year.”

Durum acres in North America for 2010-11 are forecast to drop “significantly,” the CWB said, with Canadian acres expected down by close to 25 per cent and a smaller decline expected in U.S. durum area due to U.S. government support prices.

The euro has depreciated by about 14 per cent over the past three months against the loonie, the CWB said, estimating currency changes alone have taken over C$30 per tonne out of durum returns from the major Mediterranean markets.

Feed-grade No. 1 CW barley (Pool A) has dropped $7 per tonne in the March 2010-11 PROs, to $143 ($3.11/bu.). Malting barley values are down $8 per tonne from February to $200 and $182 respectively for Select CW two-row and six-row designated barleys.

Total world barley production is forecast to drop 3.9 per cent from last year, with consumption is expected to rise and ending stocks to decline. “Global trade, however, is expected to decline as major importers have favourable production prospects,” the CWB said.

Prospects for lower barley area in Europe and North America should provide some fundamental support for malting barley markets, the CWB said Thursday, but “large old-crop supplies still overhang the market.”

2009-10

Milling wheat values in the March 2009-10 PRO are down $4-$6 per tonne from February levels, with No. 1 CWRS (14.5) down $4 at $261 per tonne ($7.10/bu.). Most other grades are down $6 per tonne, with No. 1 CW red winter (CWRW) at $181 and CW Feed at $140 ($3.81/bu.).

The CWB said Thursday it has priced about 73 per cent of expected 2009-10 deliveries of wheat. It now forecasts its wheat pricing level to reach 90 per cent by the end of May.

Durum values in the March 2009-10 PRO are down $6 per tonne in all grades, with No. 1 CWAD (14.5) at $204 ($5.55/bu.) and No. 5 CWAD at $140 ($3.81/bu.).

No. 1 CW feed barley (Pool B) in the 2009-10 PRO is down $7 from February levels at $143 per tonne ($3.11/bu.), while malting barleys are down $2, with Select CW two-row and six-row at $209 and $191 per tonne, respectively.

Malting barley demand is “fairly well covered for the remainder of the crop year,” the CWB said, and maltsters remain “cautious” due to demand uncertainty for the important summer period.

Additional demand from China awaits Canadian and European malting barley, the CWB said, but large European carryout supplies and a weaker euro will boost the EU’s export potential and competiveness into the Chinese market.

The freight advantage from Canada to meet that demand is also declining, the CWB said, as freight costs have risen more in the Pacific than in the Atlantic.

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