Weaker market fundamentals and increased global production forecasts are pressuring wheats in the Canadian Wheat Board’s latest 2009-10 pool return outlook (PRO).
Meanwhile, "weather events" in Australia and recent demand from China have boosted the outlooks for malting-quality barley, the CWB reported Thursday. The board’s feed barley outlook remains unchanged from its November report.
The International Grains Council (IGC) has pushed up its global wheat production forecast by one million tonnes, to 668 million. Production concerns in the southern hemisphere have been offset by increases in Europe, Russia and Canada, the board said.
As well, "speculative fund activity, which was largely responsible for the rally in November, has declined in the past weeks and is providing diminished support for wheat futures," the CWB said.
And U.S. export prices have also dropped over the past three weeks, but are still not competitive in many markets, the board said.
Milling wheat values in the December 2009-10 PRO were mostly down $4 to $6 per tonne from November levels, with No. 1 Canada Western Red Spring (CWRS), 13.5 per cent protein, down $4 at $245 per tonne ($6.67 per bushel); No. 1 CW Red Winter (CWRW) down $5 at $188 per tonne ($5.12 per bushel); and No. 3 CWRS down $6 at $193 per tonne. ($5.25 per bushel)
Slow exports and limited domestic buying have pressured U.S. durum, while a declining euro against the U.S. dollar has pressured world durum values, the CWB said.
Statistics Canada reently increased its production estimate for Canadian durum by about 300,000 tonnes, to 5.4 million, the CWB noted. As well, the IGC has revised its global durum production forecast to 40 million tonnes from 39 million.
Thus durum values in the December PRO are mostly down by $2 per tonne, with No. 1 CW Amber Durum (CWAD, 12.5 per cent) down at $211 ($5.74 per bushel). No. 5 CWAD is down $3 per tonne, at $146 ($3.97 per bushel).
Australia’s barley growing regions have experienced "several weather events" expected to limit availability of high-quality malting barley from that country, the CWB said.
Demand for malting barley from Europe and North America continues to be slow due to the recession, but has been offset by "price-supportive" demand from China in recent months, the board said.
However, the CWB warned, China "remains a very price-sensitive buyer with many end-users willing to switch to lower-quality domestic and imported barley if prices for higher-quality imports rise."
The CWB’s designated barley values thus have risen by $3 per tonne, with Select CW two-row at $211 per tonne ($4.59 per bushel) and six-row at $193 ($4.20 per bushel).
As for the CWB’s feed barley PRO, the board notes the price spread between exporting origins has narrowed since its November outlook, with prices stronger out of the Black Sea and lower in Europe and Canada.
The board’s feed barley PROs for December in Pool A and B both sit at $152 per tonne ($3.31 per bushel), unchanged from November levels.
Also affecting the feed picture, he U.S. Department of Agriculture estimates world corn production at 790 million tonnes, two million tonnes less than last year. Global barley production is also lower than last year, the CWB said, at 149 million tonnes.