Even with "abundant" global wheat supplies, the wheat market has found some bullish news in wheat-growing countries’ weather — and its effects on crops both coming and going.
The Canadian Wheat Board — whose latest pool return outlook (PRO) on Thursday saw milling wheat values remain flat or rise by up to $6 per tonne — reports "logistical problems" have kept exportable wheat from leaving the Black Sea region and Australia. Wheat markets also recently saw a rally on continuing dryness in North America and a deep cold snap in Europe.
Meanwhile, other than increases in the No. 4 and 5 grades, durum values remained flat in the new PRO, and malting barley values slipped by $1-$2 per tonne.
The biggest increase in wheat PRO values, $6 per tonne, was seen in No. 1 Canada Western soft white spring (CWSWS) and No. 1 CWSWS Select (protein below 10.5 per cent), pegged at $243 and $249 per tonne ($6.71 and $6.78 per bushel) respectively, as well as in No. 3 CW red winter (CWRW), rising to $237.
High-protein No. 1 CW red spring (CWRS, 14.5 per cent protein) rose to $320 per tonne ($8.71/bu.), up $2, while No. 3 CWRS remained flat at $237 and No. 1 Canada Prairie spring red (CPSR) rose to $242, up $5. CW feed-grade wheat rose $5, to $212 per tonne ($5.77/bu.).
U.S. wheat futures markets are now close to levels seen a month ago, having traded higher for most of the past month on weather news, the CWB said Thursday.
Minneapolis wheat futures held strength on fears of continued dryness in parts of the Praires and northern U.S. Plains, the CWB said. Cold weather in Europe and the former Soviet Union also spurred talk of winterkill.
However, "a cautious tone returned to the market as several key reports brought market focus to 2012-13 production potential," the board said.
For example: the U.S. Department of Agriculture (USDA) recently boosted its world wheat production estimate to 693 million tonnes, for "the largest world wheat crop of all time."
Even with increased year-on-year global consumption, the global ending stocks-to-use ratio is estimated at 31.3 per cent, the CWB said.
"Going forward, abundant production and stocks are not supportive of the current futures levels without some outside assistance from the broader agricultural complex or the economy."
On the other hand, "logistical constraints" have stymied wheat exports from countries with exportable surpluses, the CWB said.
"Poor weather has caused further problems for Black Sea ports, resulting in slower exports out of Russia and Ukraine, while Australia’s record crop has brought its own supply-chain problems to the surface," pushing up the price of wheat from those areas, the board said.
The durum market has been "treading water" over the past month, the CWB said, as market fundamentals remain "largely unchanged." Without adverse weather in North America, Europe or North Africa as spring seeding begins, durum prices are expected to remain at a "narrow spread" to spring wheat values.
PRO values for Nos. 4 and 5 CW amber durum (CWAD) were pegged Thursday at $262 and $212 per tonne ($7.13 and $5.77/bu.) respectively, while other durum grades remained flat. High-protein No. 1 CWAD (14.5 per cent) stayed at $353 per tonne ($9.61/bu.).
Malting barley prices for the rest of the 2011-12 marketing year are forecast to "slowly weaken." Argentina and Australia have "abundant" supplies, the CWB said, so exports will be driven by "logistical bottlenecks and the availability of open shipment windows."
In Europe, thanks to quality issues, values continue to be quoted "well above" international levels.
In all, "ample" malting barley stocks from Canada, Australia and Argentina will "more than cover" demand for the rest of the marketing year, the CWB said.
Looking ahead to 2012-13, if "ample" malting barley is seeded and good weather allows for a decent harvest, "there is risk that maltsters may defer demand in an attempt to pick up new-crop supplies at a lower price," the CWB said.
The PRO value for Select CW two-row malting barley was pegged Thursday at $311 per tonne ($6.77/bu.), down $2, while Select CW six-row slipped $1, to $296 per tonne ($6.44/bu.).