Growing conditions on the Prairies and U.S. Plains have made high-protein wheat much easier to come by, a fact not lost on the Canadian Wheat Board in its latest pool return outlook (PRO).
The board’s new 2011-12 PRO, released Thursday, pegs high-protein (14.5 per cent) No. 1 Canada Western Red Spring (CWRS) wheat at $333 per tonne ($9.06 per bushel), down $7 per tonne from its PRO value in August.
At 13.5 per cent protein, No. 1 and No. 2 CWRS are down $2 and $3 per tonne respectively at $319 and $310 ($8.68 and $8.44/bu.). At 11.5 per cent protein, meanwhile, values for Nos. 1 and 2 CWRS are both up $5 per tonne, at $294 and $286 ($8 and $7.78/bu.) respectively.
Among other wheat values, No. 1 CW Red Winter (11 per cent protein) rose by $4 per tonne to $270 ($7.35/bu.) while No. 1 CW soft white spring slipped $2 to $257 ($6.99/bu.) and CW feed wheat remained flat at $236 ($6.42/bu.).
The new PRO values for wheat follow a “precipitous drop” in wheat futures since the August outlook, with Chicago futures down by over $1 and Minneapolis off by about 80 cents per bushel, the CWB said.
An “improved western Canadian quality profile” and a higher-protein harvest on the U.S. northern Plains have pressured Minneapolis futures and any premiums for protein and quality attributes, the CWB said, while “positive production” in the European Union and Black Sea regions drags on wheat values.
Furthermore, the U.S. Department of Agriculture’s Sept. 12 world wheat supply and demand estimates show global production at 679 million tonnes, with ending stocks of 194.6 million tonnes.
“These are big numbers that will continue to temper the market throughout the 2011-12 marketing year,” the CWB said Thursday.
As for protein premiums, it’s seen as “unlikely” that they’ll appreciate significantly until the market turns its focus to 2012-13, “and then only if there appear to be weather problems that compromise quality spring-wheat production.”
Exchange rates have also strengthened Canadian suppliers’ hand somewhat, as money recently began moving to the U.S. dollar, “which is perceived somewhat paradoxically as a ‘safe haven,'” the CWB said.
Durum has proved “more resilient,” price-wise, than wheat since the last PRO but has also moved lower, as USDA’s estimates point to higher ending stocks in the U.S. and Canadian durum prospects are “favourable, with expectations of a four-million-tonne crop with a much improved year-on-year quality profile.”
Demand remains strong in the Mediterranean basin for durum, the CWB said, but the euro, weakening even more than the loonie, has made the EU a more competitive supplier.
High-protein (14.5 per cent) No. 1 CW amber durum has thus tumbled $11 per tonne from August PRO levels, to $415 ($11.29/bu.), with No. 2 CWAD (13 per cent) down $8 per tonne at $391 ($10.64/bu/.). Nos. 4 and 5 CWAD remain flat at $281 and $236 per tonne respectively.
Malting barley demand is seen as remaining strong from both the U.S. and Europe, where barley crops have slumped on yield and quality respectively, the CWB said. But another major buyer, China, is seen as having secured enough supplies already to put off some purchases until crops from the Southern Hemisphere are ready.
Malting barley values are thus expected to stay strong until the harvest in Australia and Argentina begins in December, as “even average malting barley selection rates in both countries would provide a significant increase in malting barley supplies over last year,” the board said.
In feed markets, meanwhile, even as corn futures have slumped so far this month, barley “remains a cheaper alternative in many regions” and is expected to stay that way through 2011-12, with tight U.S. corn supplies boosting barley feeding worldwide.
Select CW two-row and six-row malting barley values in the September PRO are both up $2 per tonne from August, at $341 ($7.42/bu.) and $324 ($7.05/bu.) respectively. No. 1 CW feed barley (Pool A) remains flat at $252 per tonne ($5.49/bu.).