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Wheat, durum PROs drop back

Weakening markets have dragged on the Canadian Wheat Board’s 2008-09 and 2007-08 pool return outlooks (PROs) for Prairie spring wheats and durum.

The 2008-09 PROs, released Thursday, dropped $23 per tonne from April levels for all classes of wheat and for No. 5 Canada Western Amber durum (CWAD). Milling durum PROs, meanwhile, all fell $39 per tonne.

The decreases leave No. 1 Canada Western red spring wheat (14.5), for example, at $349 per tonne, down from $372. CW Feed wheat dropped to $226 from $249, while No. 1 CWAD (14.5) dropped to $404 from $443.

The 2008-09 PROs for feed and malting barleys remained unchanged.

Winter wheat conditions in the U.S., Europe and Black Sea region have stabilized or improved over the past month, the CWB said, pressuring international wheat values. Demand for old-crop wheat has also been limited as buyers await the arrival of new-crop wheat.

Furthermore, the U.S. Department of Agriculture on May 9 forecast a new record for world wheat production: 656 million tonnes, five per cent higher than the record in 2004-05. USDA expects production to be higher for all major wheat exporters except Argentina, the CWB said.

New-crop durum supplies from Mexico and the southern U.S. have weighed on international durum prices during the past month, offset somewhat by prolonged dry conditions affecting the new-crop outlook.

High corn values have supported North American feed barley prices, offset by prospects for a larger malting and feed barley crop in Europe and the Black Sea region, the CWB said. However, barley-growing areas in Canada’s south, parts of the midwestern U.S. and eastern Australia are also very dry, the CWB noted.

2007-08

The new 2007-08 PRO, also released Thursday, shows milling wheat values down $10 to $22 per tonne from March levels, while milling durum dropped $29 per tonne. Designated malting barley and feed barley (Pool B) remain unchanged.

Those drops put No. 1 CWRS 14.5 at $377 per tonne, down from $392 in March. CW feed wheat and No. 5 CWAD are both down $11 at $307 per tonne. No. 1 CWAD 14.5 dropped to $502 per tonne from $531.

“With a large percentage of the old-crop pool now sold, the downward price pressure did not affect 2007-08 values to the same extent as for the new-crop outlook,” the CWB wrote.

“Although tight world wheat stocks are still a major factor, demand from global wheat buyers has fallen to below-normal levels given the current high-price environment.”

As for durum, “demand continues to be rationed as buyers wait to see what the new crop year will bring for global durum supplies, which are expected to be significantly higher.”

Sales of 2007-08 malting barley are “largely complete,” the CWB wrote, with little change in expectations for farmer returns from the current year since the March PRO. With low worldwide carry-in stocks, malting barley prices in the international marketplace will be “very sensitive” to prospects for the upcoming crop, the board wrote.

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