New-crop wheat up, old-crop down in CWB PROs

Wheat markets’ shift to weather-related issues have spurred futures to rise and carried wheat values with them in the Canadian Wheat Board’s latest new-crop pool return outlook (PRO).

Meanwhile, with supply and demand dynamics for the 2010-11 marketing year remain largely unchanged, wheat and durum values have slipped in the 2010-11 PROs, also released Thursday.

Wheat values in the April 2011-12 PRO range from unchanged to up $16 per tonne from March levels, while durum is up between $4 and $11 per tonne. Malting barley is unchanged, while Pool A feed barley is up $16 per tonne.

In the 2010-11 PRO, wheat values range from up $2 to down $3 per tonne; durum is mostly down $2 per tonne. Malting barley is down $1 per tonne, while Pool B feed barley is down $4 per tonne.

2011-12

In the new-crop PRO, “market volatility remains a constant,” the CWB said in its market commentary Thursday. “There is general market concern over slow planting progress in the U.S. Corn Belt and the Northern Plains hard red spring (HRS) areas, and the lack of any planting across Western Canada.”

However, “this progress, while concerning, has played out before and typically the crop eventually gets planted.”

Overall, the world is forecast to produce upward of 660 million tonnes of wheat during the 2011-12 crop year, the board said, noting “favourable” results could move that total closer to 670 million and pressure prices.

“While the market has been commenting on dryness concerns in the EU and persistence of drought in China, the reality is that neither crop has been totally compromised,” the board added.

The CWB added Thursday that it has no grain priced for anticipated 2011-12 crop year deliveries of wheat, and expects its wheat pricing level will reach about 25 per cent by the end of September.

Canada Western (CW) feed wheat showed the largest increase in the April PRO, up $16 per tonne from March to $231. High-protein No. 1 CW red spring (CWRS 14.5) is up $10 at $352, while No. 1 CWRS (11.5) remains flat at $298. No. 1 CW soft white spring is also unchanged at $269 per tonne, while No. 1 CW red winter (CWRW 11.0) is up $5 at $277.

World barley production, meanwhile, is forecast to be 11 per cent larger in 2011-12, but still to remain slightly under total world barley usage. International feed barley values are thus forecast to remain firm into 2011-12, but domestic feed barley values will be the key factor in determining feed barley exports, the CWB said.

No. 1 CW feed barley (Pool A) is valued at $247 per tonne, up $16 from March.

In malting barley markets, meanwhile, “the pressure is on for a much-needed supply” in 2011-12 after the poor-quality crop of 2010-11. That said, Select CW two-row and six-row malting barley values remain flat in Thursday’s new-crop PRO, at $328 and $311 per tonne respectively.

2010-11

Worries about seeding progress throughout the U.S. Corn Belt and northern Plains and Canada’s Prairies will provide a price floor for old-crop wheat, the CWB said Thursday.

Furthermore, “significant” quality premiums will stay in place until there’s more certainty that new-crop production can ease the current shortage of higher-quality wheat, the board said.

About 80 per cent of expected 2010-11 crop year deliveries of wheat to the CWB have now been priced, the CWB said, and it expects the wheat pricing level to reach about 97 per cent by the end of July.

Except for high-protein No. 1 CWRS (14.5 per cent), which is up $2 per tonne at $381, most wheat values in the CWB’s April PRO are flat or down from March levels. No. 1 CWRS (11.5) is down $3 per tonne at $299; No. 3 CWRS is flat at $271; No. 1 CWRW is flat at $272; and CW feed is also unchanged at $239.

Durum values in the CWB’s April 2010-11 PRO are all down $2 per tonne except Nos. 4 and 5 CWAD, which are flat at $239 and $234 per tonne respectively. No. 1 CWAD (14.5) has slipped to $299, No. 2 CWAD (13.0) to $267 and No. 3 CWAD to $243.

“Global barley prices continue to favour barley originations closer to demand,” the CWB said. For example, producers in the EU and Australia have both a proximity and logistical advantage to supply Saudi Arabia. No. 1 CW feed barley (Pool B) has slipped $4 per tonne in the April PRO, to $234.

Malting barley demand is “well covered” for the remainder of the crop year, the CWB said, pegging Select CW two-row and six-row malting barley at $252 and $235 per tonne respectively, both down $1 from March PRO levels.

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