Milling wheat values have risen slightly in spite of themselves in the Canadian Wheat Board’s latest 2009-10 pool return outlook (PRO), while a delayed corn harvest in the U.S. has helped prop up Pool A feed barley.
Since the October PRO, the CWB said in its market outlook Thursday, “the international economic situation has shown signs of improvement, decreasing perceived risks in a number of markets, including wheat futures.”
In other words, in spite of weaker supply/demand fundamentals, speculative money flowing into U.S. wheat futures markets has pushed prices higher, the CWB said.
Traditional price relationships between U.S. wheat futures markets have been altered, the CWB said, with Chicago futures currently trading at or above Kansas City and Minneapolis.
Relationships between world currencies remain volatile, the CWB noted, with the strength of the euro and Australian dollar against the U.S. dollar providing some support for the international wheat price structure.
On the downside, the CWB noted the U.S. Department of Agriculture recently raised its 2009 world wheat production estimate to 672 million tonnes, with world wheat stocks building by 24 million tonnes this year.
USDA also raised production and export projections for Russia, Ukraine and Kazakhstan, the CWB said. The result is expected to be a large supply of low-priced wheat, limiting exports from traditional wheat-exporting nations.
The milling wheat PROs have thus risen slightly, mostly in the $1 to $4 range. At $213 per tonne, No. 2 Canada Western Red Spring (11.5 per cent protein) is up just $1 per tonne from October values, as are No. 1 CW Soft White Spring (now $172), and No. 1 CW Red Winter (now $193) among others.
Among the few larger increases over October levels, meanwhile, were No. 1 CWRS 14.5, which rose $8 per tonne to $271, and No. 1 CWSWS Select (under 9.9 per cent protein), which rose $10 per tonne to $195.
Durum vales, meanwhile, all remained flat in the November PRO, with No. 1 Canada Western Amber durum (14.5 per cent) at $227 per tonne and No. 5 CWAD at $149. The fundamentals of the durum market remain weak, the CWB said, although international prices have recovered slightly.
Durum prices remain at historically wide discounts to spring wheat, the CWB noted, making U.S. and European farmers more reluctant to sell. That in turn has limited the nearby available supply of durum and provided some support to prices.
Domestically, the recent removal of an import tariff in the European Union has improved Canadian access to a major durum market, the CWB said. On an unrelated note, the Canadian Prairies’ durum production this year, at 5.1 million tonnes, is the fifth-largest durum crop on record.
The CWB on Thursday announced its first Pool B feed barley PRO for 2009-10, with No. 1 CW feed barley pegged at $152 per tonne. No. 1 CW feed in Pool A, meanwhile, jumped $7 per tonne from October levels, landing at $152 also.
Malting-grade barley values are unchanged from October, with Select CW two-row sitting at $208 per tonne and Select CW six-row at $190.
While the international barley price structure has moved higher, the CWB said, it’s still well below levels that would pull significant volumes of Canadian feed barley from the domestic market.
The delayed corn harvest in the U.S., however, has provided support for feed grain prices, the CWB noted. The U.S. corn harvest, usually around 94 per cent complete by this time of year, is currently 68 per cent complete, the CWB said.
Strong demand from China and the weak U.S. dollar have been supportive for global malting barley prices, the CWB said. But large stocks of malt and large malting barley supplies in Canada, Australia and the EU are “more than sufficient” to cover global demand, which in turn limits price increases.