New estimates of U.S. wheat acres, record-high exports from overseas and a strong loonie have combined to cut down the Canadian Wheat Board’s 2009-10 pool return outlook (PRO) for wheat by $12 to $17 per tonne.
Among the July PROs released Thursday, lower international durum values pressured the new-crop durum outlook downward by $14 to $18 per tonne, while malting barley PROs slipped $6 per tonne.
In the wheat PROs, for example, No. 1 Canada Western soft white spring (CWSWS) dropped $12 per tonne from June values, to $202. No. 1 CW red spring (CWRS), 13.5 per cent protein, is down $13 from June at $273 per tonne, while No. 1 CWRS (11.5) is down $17 at $252 per tonne.
In its wheat outlook, the CWB noted the U.S. Department of Agriculture’s increased estimates for U.S. spring wheat acres, weakening demand and harvest pressures all weighing on futures. The U.S. winter wheat harvest is winding down, the CWB noted, with some areas showing low protein and quality issues.
Recent rains on Canada’s Prairies may maintain crops in previously dry areas of Alberta and Saskatchewan, the board noted, “but in many areas the yield loss is now irreversible.”
As well, “exports from the EU, Russia and Ukraine are at record levels and are expected to remain strong into new crop pressuring prices for mid and lower quality, particularly soft wheat,” the CWB said. :Large 2008-09 carry-out stocks will provide most exporting countries with adequate supplies for export as they await new-crop harvests.”
In Thursday’s PROs for durum, values for No. 1, 2 and 3 CW Amber Durum (CWAD) all dropped $18 per tonne, with No. 1 CWAD (11.5 per cent) now at $270. No. 4 CWAD is at $229 per tonne, down $17 from June, while No. 5 CWAD is down $14 at $181.
North American durum values took “a bigger hit” than European values this month, the CWB said, with farmers in the U.S. southwest and Mexico already having delivered most of their new-crop durum harvest, pushing posted elevator prices lower.
“The northern U.S. and Canadian durum crops remain about two weeks behind normal development, but have benefitted from recent rains which have helped stabilize the crop,” the CWB added.
Malting barley values in Thursday’s PROs for malting barley dropped to $245 and $225 per tonne for Select CW two-row and six-row, respectively. “The spread between malting-quality barley and feed barley narrowed slightly this month and is expected to narrow further, to more traditional levels, in the upcoming crop year,” the CWB said.
Canadian and EU malting barley production is forecast to drop 21 per cent and 11 per cent respectively, while Australian barley production is forecast to increase 26 per cent, the CWB said, but noted Canada and the EU have large stocks of malting barley to carry in from 2008-09. Argentina’s production is now forecast to rise five per cent in 2009 but seeding has been slowed by dry weather in the barley-growing region.
No. 1 CW feed barley (Pool A) remained flat in Thursday’s 2009-10 PRO at $158 per tonne. Production is forecast to drop in 2009-10 but most major export nations are carrying out large stocks from 2008-09, and with current North American feed barley prices above international values, export sales will be limited.
Also, the CWB noted, increased corn acreage in the U.S. has pressured feed grain prices. North American and European values slipped slightly from June levels; Black Sea barley values fell almost 20 per cent.
The CWB on Thursday also released its July PRO for the 2008-09 crop year, showing wheat values down $2 per tonne from the previous PRO in May; milling durum values up $2 per tonne; malting barley values down $3 per tonne; and Pool B feed barley unchanged at $163 per tonne.
For example, No. 1 CWRS (13.5) fell to $304 per tonne from $306 in May. No. 1 CWAD (13.0) is up $2 at $369 per tonne, while feed-grade No. 5 CWAD is down $2 at $190 per tonne. Select CW two-row and six-row malting barley are at $314 and $294 per tonne respectively.
Negative impacts from lower wheat futures and the stronger loonie are limited in Thursday’s 2008-09 wheat PROs, the CWB said, as a “large percentage” of the board’s 2008-09 wheat pool has already been priced.
The 2008-09 durum pool is now also “largely sold,” limiting the impact from future change in international values, the CWB said. Malting barley in the 2008-09 pool can also expect “minimal” impact from future price changes for the same reason, the board said.