Ongoing market volatility worldwide, offset by supportive corn and soybean fundamentals, has pressured wheat values slightly downward in the Canadian Wheat Board’s latest pool return outlook (PRO).
Wheat values are mostly down by as much as $4 per tonne in Thursday’s updated 2010-11 PRO, as are values for malting barley and Pool B feed barley, while durum values are up by as much as $6.
PRO values for a few wheat grades are up slightly, with No. 1 Canada Western Red Spring (CWRS) at 14.5 per cent protein at $329 per tonne, up $1 from October levels; CW Feed up $2, at $232 per tonne; and No. 1 CW soft white spring (CWSWS) at $251, up $1.
Most wheat grades, however, have slipped, with No. 1 CWRS (12.5) down $1 at $292 per tonne; No. 1 CWRS (13.5) at $306, down $2; No. 1 Canada Prairie spring red (CPSR) down $3 at $252; No. 3 CWRS (13.0) at $271, down $4; and No. 4 CWRS at $240, also down $4.
Generally, the CWB said in its PRO commentary, world markets are “rife with volatility and uncertainty. The need to promote economic recovery is being counterbalanced by a need to avoid the ill effects of excessive growth.”
Wheat, the board said, will “continue to be supported by corn and soybean price structures, but negatively affected by the volatile macroeconomic conditions.”
But the CWB said it sees greater potential for wheat to assume a “more influential” market role, noting also that the risk of production problems is increasing in several winter wheat-growing areas such as Ukraine and Russia, where above-normal temperatures are delaying winter wheat dormancy.
The CWB also noted there’s been “little unexpected” in terms of wheat demand so far in this marketing year, with prospects less likely now for Russia or Pakistan to launch aggressive wheat import programs.
China, however, is now seen as more likely to launch a “significant” corn import program before this spring.
Durum PRO values, especially at higher protein and grade levels, are up somewhat across the board, with No. 1 CW amber durum (CWAD) at 14.5 per cent protein at $283 per tonne, up $6 from October levels; No. 1 CWAD (11.5) at $270, up $5; No. 3 CWAD at $240, up $1; and No. 5 CWAD at $225, up $3.
Overall, the CWB said, world durum consumption is expected to exceed production and global ending stocks will fall year-on-year, thus providing broad support to the durum price structure.
Shortages of Nos. 1 and 2 CWAD will “challenge the ability to satisfy 2010-11 customer demand,” the CWB said, and will also “significantly reduce the quality profile of Canadian durum carryover into 2011-12.”
Limited supplies of high-quality durum in the U.S., Canada and the EU-27 offer strong support for maintaining relatively wide spreads between higher- and lower-quality durum throughout the 2010-11 marketing year, the board said.
As with wheat, the CWB said, “continued volatile and uncertain economic conditions may mitigate any upward price momentum that is based on market fundamentals.”
However, the board said, prospects for an “intensified acreage battle” in 2011 offer support for durum and wheat markets alike.
November PRO values for malting barley are down $7 per tonne from October levels, with Select CW two-row now at $253 and Select CW six-row at $236.
Meanwhile, No. 1 CW feed barley (Pool B) is down $6 per tonne at $22, while Pool A is unchanged at $232 per tonne.
Though overall world barley supplies are tight, Australia’s barley exporters expect “abundant” domestic supplies and have already started “aggressively” competing for export demand, the CWB said Thursday.
“This new influx of feed barley into export channels has already pushed down the international feed barley price structure.”
The CWB expects feed demand to stay strong for the rest of the marketing year due to “regular” demand from the Middle East and Asia, but beyond that, there has been “little unexpected demand evidenced to date.”
With the impact becoming much clearer from relatively poor harvest conditions on Canada’s Prairies this fall, malting barley crop quality is considered “damaged,” malting selections have been “slow” and total selectable barley supplies are “significantly lower” than in the last few years, the CWB said.
But the amount of malting-quality barley available in the world this year “remains an unknown” until Australia’s harvest is done.
“On the one hand, even an average-quality barley harvest in Australia will affect global supply enough to cool off the market,” the board said. “On the other hand, a quality wreck could push malting barley prices higher.”
China, for one, is already buying new-crop malting barley and remains the world’s largest buyer, but recently has slowed its purchases with an eye on the Australian harvest.