Wheat drops back in 2008-09 PRO

Wheat values have retreated in the new 2008-09 pool return outlooks (PROs) from the Canadian Wheat Board as wheat harvests get underway on the northern half of the globe.

The CWB, in its 2008-09 PROs released Thursday, show nearly all wheat values down by $11 per tonne compared to June levels, putting No. 1 Canada Western Red Spring (CWRS) 11.5, for example, at $327 per tonne and No. 1 Canada Western Red Winter (CWRW) at $299. CW feed wheat, the lone exception, remains flat at $236.

Durum, designated barley and feed barley values in Thursday’s 2008-09 PRO all remain unchanged from June levels, leaving No. 1 Canada Western Amber Durum (CWAD) 14.5, for example, at $412 per tonne, No. 1 CW Pool A feed barley at $245 and Select CW two-row designated barley at $360.

Futures markets have moved lower, the CWB wrote, due to “favourable weather conditions” for the winter wheat harvest in the U.S., improved U.S. row-crop prospects and the start of the wheat harvest in the Black Sea region and Europe. Offsetting those drops in futures markets are concerns about winter wheat crops in the southern hemisphere, and lowered expectations due to dry conditions in Argentina and Australia.

Durum production prospects on Canada’s Prairies have improved over the past month, the CWB said, citing frequent rainfall in the southern Prairies that boosted soil moisture levels. The European crop is larger than last year and of more consistent quality, which will pressure prices, the board added. Yield prospects, meanwhile, are declining in the durum-growing areas of the northern U.S. Plains.

International prices for malting barley have softened due to the coming harvest of spring barley in Europe, the CWB said, and good growing conditions in Canada have been offset by increased concerns about U.S. malting barley prospects. As well, the harvest of winter barley is underway in Europe and the Black Sea region, making for “large declines” in international prices.

2007-08

Wheat values fell as well in the CWB’s PROs for 2007-08, also released Thursday, but by just $3 per tonne compared to the May 2007-08 PROs. For example, No. 1 CWRS 11.5 dropped to $365 per tonne, and No. 1 CWRW to $327. CW feed wheat dropped to $304.

International market conditions for wheat have “deteriorated significantly” over the past two months, the CWB wrote, citing factors such as a better-than-expected U.S. hard red winter wheat harvest and “excellent” prospects in Europe and the Black Sea.

Milling durum values in Thursday’s 2007-08 PRO also rose by $7 to $8 per tonne from May levels, with No. 1 CWAD 14.5 up $7 to $509 per tonne and No. 4 CWAD up $8 to $482. No. 5 CWAD shed $3, down to $304 per tonne. Durum prices have been pressured by the U.S. desert durum and Mediterranean harvests, the CWB said, but the effect on nearby market prices was “less than anticipated.”

No. 1 CW pool B feed barley is up $4 per tonne from its June 2007-08 PRO level, reaching $279. Designated barley values for the July 2007-08 PRO are up $3 per tonne from May levels, with Standard Select two-row, for example, at $293.

Projections for feed barley are up “modestly” from the previous PRO, the CWB said, citing “favourable sales experience and improvements in logistical costs.” A “moderate increase” in the July malting barley outlook points to “positive returns on recent business” as overall pool sales near completion.

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