Lowered new-crop expectations support CWB’s PROs

Underwhelming production prospects for the 2011-12 wheat crop are boosting values for both new- and old-crop wheat and durum in the Canadian Wheat Board’s latest round of pool return outlooks.

Wheat values in the CWB’s May 2011-12 PRO, out Thursday, are up by between $10 and $16 per tonne from April levels, while durum values are up by $10-$14, malting barleys up $22 and feed barley up $6.

In the May 2010-11 PRO, also released Thursday, production concerns have spurred more “modest” increases in values, with wheats ranging from flat to up $6 per tonne, durum up $6 and barley values flat at April levels.

Wheat

“Wheat has been primarily supported by increasing weather concerns in the Northern Hemisphere crop,” the CWB said in its 2011-12 PRO commentary Thursday.

Among those concerns are persistent drought in the U.S. Southern Plains and Europe, depleted subsoil moisture from last year’s droughts in Russia and Kazakhstan, and excess moisture and flooding in North Dakota, Manitoba and eastern Saskatchewan that have delayed seeding past optimal dates.

So far, the CWB said, it has priced about two per cent of the expected 2011-12 crop year deliveries of wheat, and expects to have about 25 per cent priced by the end of September. About 85 per cent of expected 2010-11 deliveries are priced, the board added, expecting to have about 97 per cent priced by the end of July.

Because of sales to date, wheat price increases are “modest” in the 2010-11 pool, the CWB said. The old-crop market at this time of year is normally more focused on harvest pressure from new-crop wheat, the board said, but given recent concerns over the new crop, “this year is different.”

In the May 2011-12 PRO, No. 1 Canada Western Red Spring (CWRS) at 14.5 per cent protein is pegged at $363 per tonne ($9.88 per bushel), up $11 from April. No. 3 CWRS is up $14 per tonne at $295 ($8.03/bu.), while No. 1 Canada Prairie Spring Red (CPSR) is up $16 per tonne at $292 ($7.95/bu.). CW feed-grade wheat is up $10 per tonne at $241 ($6.56/bu.).

In the May 2010-11 PRO, No. 1 CWRS (14.5) us up $4 per tonne at $385 ($10.48/bu.), while No. 2 CWRS (13.5) is up $6 at $335 per tonne ($9.12/bu.). No. 1 CPSR is up $2 at $276 ($7.51/bu.), while No. 1 CW Extra Strong is up $3 per tonne at $316 ($8.60/bu.). CW Feed wheat is up $1 per tonne at $240.

Durum

The rise in durum prices since last month has been stronger than for wheat, indicating durum fundamentals are tightening, the CWB said Thursday. The main driver for prices has been the condition for the North American crop, where heavy rains in the eastern Prairies, Montana and North Dakota have stalled plans for durum seeding, with “significant reductions” expected in seeded area.

In the May 2011-12 PRO, most CW amber durum (CWAD) grades are up $14 per tonne from April levels. No. 1 CWAD (14.5) is pegged at $363 per tonne ($9.88/bu.), No. 2 CWAD (13.0) at $336 ($9.14) and No. 3 CWAD at $302 ($8.22). Nos. 4 and 5 CWAD are up $10 per tonne at $257 and $236 respectively.

In the May 2010-11 PRO, meanwhile, most durum values are up $6 per tonne, also on dimmer prospects for the 2011-12 crop. No. 1 CWAD (14.5) is pegged at $305 per tonne ($8.30/bu.), No. 2 CWAD (13.0) at $273 ($7.43) and No. 3 CWAD at $249 ($6.78). Nos. 4 and 5 CWAD are up $1 per tonne at $240 and $235 respectively.

Barley

Although world barley production and ending stocks are expected to increase in 2011-12, drought in Europe is having a “sizeable impact” on world barley markets by tightening global feed-grain supplies and causing European malting barley values to increase “rapidly” at a period of tight supply globally.

“Persistent” seeding delays for other crops in North America may lead to more barley acres, the CWB said. However, it added, late seeding often leads to lower quality.

Malting barley values in the May 2011-12 PRO are up $22 per tonne, with Select CW two-row and six-row at $350 and $333 ($7.62 and $7.25/bu.) respectively. Feed barley (No. 1 CW, Pool A) is up $6 per tonne at $253 ($5.51/bu.).

Barley values in the May 2010-11 PRO remain at April levels “due to the highly sold position of the pools,” the CWB said, with Select CW two-row and six-row at $252 and $235 per tonne ($5.49 and $5.12/bu.) respectively and No. 1 CW feed barley (Pool B) at $234 ($5.09).

The CWB’s next round of 2011-12 and 2010-11 PROs is due out June 23.

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