Healthy-looking wheat harvests and already-large supplies of barley have added to general uncertainty in grain markets and to heavy pressure on the Canadian Wheat Board’s latest pool return outlooks (PROs) for 2009-10.
Compared to August levels, the new PROs released Thursday afternoon find wheat PROs ranging from down $13 to up $3 per tonne, while malting and feed barley values dropped by $12 and $9 per tonne respectively.
“Despite a very late harvest, yield and quality expectations have improved significantly from a month ago,” the CWB wrote of the world wheat picture in its outlook Thursday.
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“Commodity markets and currency relationships remain volatile, adding to the overall uncertainty typical of the harvest period.”
U.S. wheat futures markets have dropped between 19 cents and 46 cents per bushel over the past month, and are now trading at levels similar to the beginning of 2007, before the historic grain price rally began, the CWB wrote. The ongoing strength of the Canadian dollar continues to weigh down Canadian-dollar price outlooks.
The U.S. Department of Agriculture recently raised its estimate for world wheat production to 664 million tonnes; forecasts were increased for the European Union, Russia, Ukraine and Kazakhstan. And in Canada, the spring wheat harvest has made good progress under “ideal” conditions and is now over 60 per cent complete, the CWB said.
Durum fundamentals have weakened since last month’s PRO, pressuring international values lower, with higher quality and quantity now seen in North America’s durum crops, the CWB said.
Malting barley has been pressured lower in value by large supplies of quality barley in Europe and the ongoing harvest in the Northern hemisphere. Canadian supplies of malting barley, however, are expected to be lower due to a smaller crop.
Meanwhile, the CWB added, large supplies and weak international corn values continue to pressure global feed grain prices, feed-grade barley included.
Values for No. 1 Canada Western Red Spring (CWRS) at a high-quality 14.5 per cent protein are at $263 per tonne, up $3 from August levels, while No. 1 CWRS (11.5) is down $7 at $219 per tonne.
No. 1 CW Soft White Spring (CWSWS, Select below 9.9) is down $13 per tonne at $185, while CW Feed is down $5 at $149 per tonne.
No. 1 CW Pool A feed barley is down $9 at $145, while Select CW two-row and six-row malting barleys are down $12 per tonne at $212 and $194 respectively.
“Ton of money”
CW Amber Durum (CWAD) values, meanwhile, are mostly down $25 per tonne, with No. 1 CWAD (14.5) now at $235 per tonne. No. 5 CWAD is down $5 at $149 per tonne.
The Western Canadian Wheat Growers Association, a Saskatoon-based pro-deregulation farmers’ group, argued Thursday that the CWB’s decision to limit its sales of durum in 2008-09 has proven costly for Prairie farmers, given the new durum PRO levels and the average yield of 34 bushels per acre for Prairie durum in 2008.
Citing the 2009-10 average PRO for No. 1 CWAD (13.0), basis Saskatchewan, of $4.62 per bushel ($169.56 per tonne) after deductions, and the 2008-09 final PRO of $8.45 per bushel ($310.13 per tonne), the WCWGA said the CWB’s decision to hold back sales will cost Prairie farmers about $34 per acre.
“In 2008-09, CWB officials elected to accept only 74 per cent of durum wheat offered by Prairie farmers, forcing them to carry over 26 per cent of their durum supplies to this crop year or to sell into the much lower-priced feed market,” the group said.
“Where’s the CWB’s single desk premium?” Fort Macleod, Alta. farmer Stephen Vandervalk, the WCWGA’s Alberta vice-president, said in the group’s release, also citing prices received by Montana durum growers at around the same time.
“Not only do we get a lower price, but we end up incurring higher storage and interest costs. On top of that, we’ve lost a ton of money on the durum we involuntarily carried over into this crop year.”
Final flat for 2008-09
The CWB on Thursday also released its final PROs for the 2008-09 crop year, with wheat and malting barley values flat from August.
PROs for milling durum are mostly down $1, with No. 1 CWAD (14.5) down to $379 per tonne. No. 5 CWAD remains flat at $190 per tonne. No. 1 CW feed barley, Pool B, rose $5 per tonne to $168.
Whatever wheat in the CWB’s 2008-09 pool remained unsold was in line with the board’s marketing projections back in July, the CWB said. The slight drop in durum values reflected declining values in those prices.
The increase in the feed barley PRO reflects returns that “slightly exceeded” the board’s expectations at the time of the July PRO. Designated barley was “heavily sold” at the time of the July PRO and thus doesn’t register on September PRO values.
