A “very strong month” for wheat cash prices and futures values has pumped up the Canadian Wheat Board’s wheat pool outlooks by $3 to $26 per tonne.
The CWB on Thursday issued its December pool return outlooks (PROs) for the 2010-11 crop year, with durum up $4-$14 per tonne, Pool B feed barley up $3, Pool A feed barley flat and malting barley down $1.
The CWB said Thursday it has priced about 45 per cent of Prairie farmers’ expected 2010-11 deliveries of wheat, and expects to have priced about 60 per cent by the end of next month.
Wheat futures values still show “high levels of volatility” but have increased “significantly” on all three North American wheat exchanges, the CWB said Thursday. Cash wheat prices have also risen, moreso for higher-quality, higher-protein wheats. The spread between lower- and higher-quality wheat has increased month-on-month, the board said.
Wheat markets are mainly reacting to what the CWB called “devastating” harvest weather in Australia, where heavy rainfall throughout the eastern half of the country has stalled harvests and led to significant reduction in the crop’s quality profile.
And the U.S., which carried in large wheat supplies and had a relatively good year, quality-wise, in 2010, is seeing “enhanced export opportunities,” the CWB said.
“In general, when the world is forced to ‘buy American,’ it has a positive impact on the world wheat price structure,” the board said. “The U.S. is on pace for its biggest wheat export program in almost 20 years.”
The board’s PRO values for milling wheat show No. 1 Canada Western red spring (CWRS) at a high protein level of 14.5 per cent to have jumped the farthest, hitting $355 per tonne, up $26 from November PRO values.
While all milling wheat PRO values released Thursday were up from November levels, the increases vary widely. CW feed wheat is up just $3 per tonne at $235, while No. 1 CWRS (11.5) is up $5 per tonne at $282.
Meanwhile, PRO values are up $19 per tonne for No. 1 CWRS (13.5), at $325, and $21 per tonne for No. 2 CWRS (13.5), at $313.
In the durum PROs, meanwhile, “the quality issue remains front and centre,” the CWB said Thursday. There remain limited supplies of high-quality durum in Canada and the U.S., meaning customers will be “challenged” to meet demand until new-crop durum comes to hand from Arizona and California.
The CWB still expects very little higher-quality durum to be carried forward to 2011-12, which in turn should support continued high spreads between high- and low-quality durum.
The biggest jump in December’s durum PROs is also based on the highest quality and protein, with No. 1 CW amber durum (CWAD), 14.5 per cent protein, up $14 per tonne at $297, while No. 4 CWAD is up just $4 per tonne, at $236.
Eastern Australia’s recent heavy rains “will ensure that any barley crop left standing will undoubtedly grade feed” and will also further support malting-grade barley prices, the CWB said Thursday, noting western Australia’s barley production is limited by drought.
On the demand side, Saudi Arabia will still need a “significant” amount of feed barley before the end of the marketing year, and “with little room for substitution, Saudi Arabia’s feed requirements will be too great for Australia to cover and will require further imports from Europe and Canada.”
Due to Western Canada’s wet harvest, total selectable (malting-grade) barley supplies are significantly lower than in the last few years, leaving a “limited volume of 2010-11 malting barley left to market.”
Thus, the CWB’s December PROs for Select CW two-row and six-row malting barley are both down $1 per tonne from November values, at $252 and $235 per tonne respectively. But No. 1 CW feed barley is up $3 per tonne at $225 in Pool B, where Pool A remains flat at $232.
The CWB’s next 2010-11 pool outlook is due out Jan. 27, 2011.