Concern that the rising Red River will delay spring seeding, long enough for farmers in Manitoba, Minnesota and the Dakotas to switch to soybeans, is among the factors supporting the new-crop wheat outlook.
The Canadian Wheat Board on Thursday rolled out its March pool return outlooks (PROs) for both 2009-10 and 2008-09, finding the most substantial increases in new-crop (2009-10) milling wheat, rising $8 per tonne in all grades and classes.
For example, No. 1 Canada Western Red Spring (CWRS) wheat at 12.5 per cent protein is listed at $290 per tonne in the March 2009-10 PRO, up from $282 in the February 2009-10 outlook. No. 1 CW Red Winter (CWRW) is at $251 per tonne, up from $243.
However, durum values in the March 2009-10 PRO are all $3 per tonne lower, with No. 1 CW Amber Durum (CWAD), 11.5 per cent protein, for example, at $290 per tonne, down from $293.
Malting barley PROs for March 2009-10 are also down, by $8 per tonne, from February levels, with Select CW two-row and six-row now at $255 and $235 per tonne respectively. Pool A feed barley ($161), feed wheat ($198) and No. 5 CWAD (also $198) are unchanged from February.
Values for wheat, durum and malting barley changed only slightly, meanwhile, in the March 2008-09 PROs also released Thursday. Most grades of milling-quality wheat were up $1 per tonne, with No. 1 CWRS (12.5) at $298, up from $297, and No. 1 CWRW at $249, up from $248. Nos. 3 and 4 CWRS and CW Feed remain flat from February at $266, $254 and $196 respectively.
Changes in milling durum values in the March 2008-09 PRO ranged from up $2 to down $3 per tonne. No. 1 CWAD (11.5) is at $356 per tonne, up from $354, while No. 2 and No. 3 CWAD (both 13.0) are at $344 and $329 per tonne, down $3 each. No. 5 CWAD is flat at $196.
No. 1 CW feed barley (Pool B) dropped $3 per tonne in the March 2008-09 PRO to $166, while Select CW two-row and six-row malting barley both remained flat from February at $320 and $300 per tonne, respectively.
World wheat production is expected to shrink next year by 30 to 50 million tonnes, but is still projected to be the second-largest crop on record, the CWB said in its 2009-10 outlook. The International Grains Council released its initial forecast for a 2009 world wheat crop of 651 million tonnes, down 36.5 million tonnes from last year, the CWB said.
Floods and drought
Concerns about the U.S. Hard Red Winter (HRW) and Hard Red Spring crops should provide some support as the market focus shifts to new-crop conditions and regions such as western Texas, Oklahoma and western Kansas continue to be under moderate to severe stress due to lack of soil moisture.
Closer to home, flooding in the Red River Valley has increased seeding concerns for southern Manitoba, North and South Dakota and Minnesota. Spring wheat planting could be delayed and may result in increased area planted to soybeans instead of spring wheat, the CWB said.
Crop conditions in Eastern Europe were favourable this past month, the CWB added, and dryness in China, western Iran and Argentina should be supportive to prices. Weather, the economy and the Canadian dollar will all play significant roles in the evolution of prices in the new crop year, the board said.
Durum production is expected to decrease in Europe, the U.S. and Canada, but increased durum acres and good growing conditions in North Africa are expected to limit any significant decrease in total production, the CWB said.
Barley production is expected to decrease worldwide in 2009-10, but will still be larger than average, the CWB said; Canadian production is expected to decline significantly, while the U.S., Australia and Ukraine are projected to have large supplies of barley.
But tightening U.S. corn supplies and less feed wheat should offset the weakened demand and provide some support to feed barley prices in 2009-10, the CWB added.
Above-average temperatures and light to moderate rainfall in Germany, France and the U.K. are beneficial for spring barley prospects, while Europe’s winter barley acres are seeing “mostly normal” conditions. But demand from importing countries is expected to remain strong in the upcoming crop year, the CWB said.
As for the 2008-09 PRO, the CWB said, as the size of the unsold portion of the milling wheat pool decreases, current price changes will have “less significance” for the PRO.
Global malting barley prices weakened in March, the CWB said, as large supplies outweighed demand. But at this stage in the marketing year, the pool is “well sold,” the board noted, and the impact of market price declines on the old-crop PRO is expected to be “moderate.”