Tight protein picture seen supporting wheat in PRO

Market fundamentals are expected to trump global political uncertainty as the Canadian Wheat Board raises its 2010-11 pool return outlook (PRO) values for wheat by as much as $13 per tonne.

The board’s latest PROs, released Thursday, see durum values up $1-$5 per tonne from its January PRO levels, while Pool B feed barley values are up $3 per tonne and malting barley values down $1 per tonne.

The Chicago, Kansas, and Minneapolis wheat exchanges saw new contract highs and then dramatic plunges in the month since the last PRO, the CWB said Thursday. The volatility, however, was based on political uncertainty, with the market pullback partly in response to the current situation in Libya, the CWB said.

Going forward into the second half of the crop year, “macroeconomic impacts that may arise from the political uncertainty, but these factors are not anticipated to have a measurable impact on wheat demand or trade.”

Market attention is expected to focus on the progress and  condition of the U.S. hard red winter wheat crop as the “prime indicator” of the depth and degree of quality wheat availability in the early portion of 2011-12 — and “early indications are that the HRW crop is in perilous condition,” the board said.

Tightening U.S. stocks are expected to be a positive factor, while widening stocks become a negative to the world wheat price complex. The world wheat situation remains “relatively abundant,” the board said, with ending stocks projected at 177.8 million tonnes, the second-highest level since 2001-02.

Most of the CWB’s representative PROs for February are up $11 per tonne from January values, with No. 1 Canada Western red spring (CWRS) at 14.5 per cent protein at $385 per tonne ($10.48 a bushel), No. 4 CWRS at $266 and No. 1 CW red winter at $273 ($7.43/bu.).

No. 3 CWRS, meanwhile, rose $13 per tonne from January levels, to $280 ($7.62/bu.), while CW Feed rose just $5 per tonne, to $245 ($6.67/bu.).


Prices for durum have largely followed wheat values during the past month, with international prices settling lower due to the recent market uncertainty, the CWB said Thursday.

However, the tightening durum situation, including “significantly declining” durum stocks in both Canada and the European Union, is expected to provide support for prices when the political uncertainty is eased, the CWB said.

Looking at durum demand, “so far the turmoil across North Africa and the Middle East has had neither a positive or negative effect,” the CWB said. Relatively good production prospects in North Africa are a “more significant” factor.

The CWB’s February 2010-11 PROs find higher-quality durum up $5 per tonne from January, with No. 1 CW amber durum (CWAD), 14.5 per cent protein, at $319 ($8.68/bu.) and No. 2 CWAD (13 per cent protein) at $286 per tonne.

No. 2 CWAD (11.5 per cent protein) is up just $4 per tonne at $278 ($7.57/bu.) while No. 3, 4 and 5 CWAD are up just $1 per tonne at $261, $245 and $234 respectively.


Recent slow offshore demand has moved the global feed barley market lower as its largest buyer, Saudi Arabia, “remains on the sidelines,” the CWB said.

Meanwhile, the board said, feed barley prices in Western Canada have strengthened on tightening western Canadian stocks, “significantly” narrowing the price gap to world prices. The size of said gap determines the opportunity for further sales of Prairie feed barley into international markets, the CWB said.

Malting barley demand has been quiet since the last PRO, the CWB said, with only “infrequent” trades reported, leading to a weakening of offshore prices.

“The 2011-12  harvest is expected to be met with a lot of pent-up demand for malting-quality barley, so if there are any production or quality issues that develop with new-crop production, prices could spike significantly.”

The board’s February 2010-11 PRO for No. 1 CW feed barley (Pool B) sits at $238 per tonne ($5.18/bu.), up $3 per tonne from January. Malting barleys are down $1 per tonne with Select CW two-row and Select CW six-row at $253 ($5.51/bu.) and $236 ($5.14/bu.) respectively.

The board’s next 2010-11 PRO is due out March 24; its first PRO for 2011-12 is due Monday (Feb. 28).

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