Wheat Price Runup Likely Short-Lived

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The recent rebound in wheat prices is unlikely to result in a second straight year of record highs, Canadian Wheat Board president and chief executive Ian White said in a recent interview.

Grain prices are rising as the market focuses on late-planting concerns in parts of the United States and Canada and a poor harvest of U.S. winter wheat, White said. Drought in Argentina has also sparked uncertainty about whether the South American country will export wheat in 2010.

“These are factors people are looking at and they’re all positive sentiments at the moment that’s part of the upswing,” White said in an interview with Reuters from Peru, where he was on a trade mission with the Canadian government.

“We are still expecting a reasonably good crop… the impact (of poor weather) at this stage is too early to tell.”

White doesn’t expect wheat prices to reach last year’s record highs because the world still has an oversupply of wheat.

“The question everybody is looking at is how far will this run go? We’d like to see it go as high as it can, but it also seems to me we do have to look at the total fundamentals in the world, and until we can see a difference in the overall supply-demand statistics and the stocks position, then you won’t see the same sort of runup. The circumstances are different than we saw in 2007-08.”

White said the wheat board will accept all of the wheat produced in Western Canada this year and he expects “minimal” carryover into next year. At the beginning of 2009, the wheat board had expected it might accept only 80 per cent of farmers’ wheat.

He predicts Canadian farmers will plant a “slightly lower” all-wheat acreage than the estimate of 25.2 million acres given by Statistics Canada earlier this spring, and modestly lower production. Flooding in Manitoba and cold weather in Saskatchewan have delayed planting.

“We are still expecting a reasonably good crop… the impact (of poor weather) at this stage is too early to tell.”

White said the CWB’s position on potential commercialization of genetically modified wheat – which some farm groups in the United States, Australia and Canada support – hinges on the reaction of export markets.

“At this stage, the export customers by and large are saying they’re very reticent to take GM products and from our point of view we have to support what our customers are telling us,” White said. “If the world goes that way and if the customers are all prepared to take it, we’re happy to go along with that.”

A key issue is whether GM wheat could be segregated from non-GM varieties, he said. Major export markets such as Europe and Japan are wary of GM food, but some farmers say wheat should be genetically modified to capture possible benefits such as higher yield and disease resistance.

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