Riding a “significant agricultural commodity rally” spurred by drastic cuts to the U.S. corn yield outlook, Prairie wheat values continue to rise in the Canadian Wheat Board’s latest pool return outlook (PRO).
“In particular, an early onset of the 2011-12 acreage battle between soybeans and corn engulfed the Chicago futures market,” the CWB said in its 2010-11 PRO commentary, released Thursday.
The October PRO values for milling wheats are mostly up $8 per tonne compared to the September 2010-11 PRO. For example, No. 1 Canada Western red spring (CWRS) at 14.5 per cent protein is up $8 per tonne at $328 ($8.93 per bushel).
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At the low end of the increased values, No. 1 CWRS (12.5) is up $7 per tonne at $293 ($7.97/bu.). The greatest increases were in the PRO values for CW feed, up $15 per tonne at $230 ($6.26/bu.), and No. 1 CW soft white spring (CWSWS) Select below 10.5 per cent protein, up $9 per tonne at $267 ($7.27/bu.).
As corn values rise, the CWB wrote, “wheat benefits because the price floor has been considerably increased.”
Overall, the board said, world wheat supply is “adequate” and early forecasts call for 2011-12 production to rise past expected consumption. However, “any production problems in 2011-12 will provide support for prices due to the short crop in 2010-11.”
As of Thursday, the CWB said, it’s priced about 31 per cent of the expected 2010-11 crop year deliveries of wheat, and expects a pricing level of 60 per cent by the end of January.
Durum values in the October PRO are up $15-$16 per tonne from September levels, with No. 1 CW amber durum (CWAD, 14.5 per cent protein) up $15 at $277 per tonne ($7.54/bu.) and No. 3 CWAD up $16 at $239 per tonne ($6.50/bu.).
Ongoing bullishness in the corn market has also supported durum, the CWB said, but it’s also become “increasingly clear that the world’s tradable durum supply is going to be short of higher quality.”
For example, hit by frost and rains during August and September, the 2010-11 Canadian durum crop is expected to be “heavily tilted” toward No. 3 CWAD and a “sizeable quantity” is expected to grade out as Nos. 4 or 5 CWAD, thus reducing Canada’s exportable supply of food-grade durum.
Barleys
International barley prices have held their value in the face of no fundamental changes in world supply-and-demand, the CWB said Thursday.
However, in terms of new information coming to the market, Ukraine has put up export quotas until the end of the year, while Russia has extended its own export ban to July 1, 2011, the CWB said. “This has effectively removed the cheapest source of feed barley from the market, which will support barley prices throughout the crop year.”
The October PRO value for No. 1 CW feed barley, Pool A, is up $5 per tonne at $232 ($5.05/bu.), while the No. 1 CW Pool B opens with a PRO value of $228 per tonne ($4.96/bu.).
Given the late harvest, the jury is evaluating the quality and selectability of Canada’s malting barley crop, and “until the quality of the crop is determined by the selection companies, it will be difficult to estimate the potential impact on sales and pool returns,” the board wrote.
China, the world’s largest malting barley customer, has slowed its purchases of new-crop malting barley and is now expected to wait on the arrival of Australian new-crop supplies before getting back to buying in a major way, the CWB said.
PRO values for designated barley remained flat Thursday at $260 per tonne ($5.66/bu.) for Select CW two-row and $243 ($5.29) for Select CW six-row.
The CWB’s next PRO for the 2010-11 crop year is due out Nov. 25.
