Canada cuts wheat outlook for 2010

 

 

The Canadian Wheat Board, in its first price projections for wheat that will be delivered by producers during the 2010-11 crop year, lowered most prices from their 2009-10 projections.

 

The 2010-11 crop year begins August 1.

 

The pool return outlook for the 2010-11 season was issued at the CWB's annual Grain World conference, which continues through Tuesday.

 

The CWB said global wheat prices are expected to face continued pressure from large global stocks in the 2010-11 marketing year.

 

Although wheat production is expected to decline in 2010-11, the drop in production is not expected to result in a significant change in stocks. The current USDA estimate of world wheat stocks for 2009-10 is 196 million tonnes, the largest level since the 2001-02 marketing year.

 

Global wheat area is expected to decline slightly in the coming year, as lower prices impact sown area, the CWB said. Growing conditions in the Northern Hemisphere have been largely positive for the winter wheat crop. No major winterkill threats have emerged during the winter and precipitation has been timely in the major producing countries.

 

The European, Black Sea and Middle Eastern regions have reported excellent winter rainfall and crops are in good condition as the spring growth period begins, the CWB said.

 

The USDA is projecting the smallest US winter wheat area since 1913, which should result in lower wheat production for the upcoming year. Canadian wheat area is also expected to decline from last year's levels due to competition from other crops, the CWB said. Despite the lower production expectations for North America, large carryout stocks in the US are currently projected to keep total supplies similar to last year.

 

The western areas of the Canadian Prairies have poor soil moisture conditions, which need to be recharged in the spring and early summer in order to reach average yield potential, the CWB said.

 

Exchange rate fluctuations are also expected to add price volatility to the outlook. The Canadian dollar has appreciated by approximately 18% over the past year, which has a direct impact on farmer returns.