April 27, 2009

The Canadian Wheat Board has lowered its price projections for wheat, durum and barley that will be delivered by producers during the 2009-10 crop year, which begins Aug. 1 and ends July 31, 2010, from its March outlook.

The Pool Return Outlook, or PRO, for most grades of wheat was lowered C$14 per tonne from the March projection. The price projection for CW feed wheat was only down C$6.

The CWB said US wheat futures have remained extremely volatile throughout the month of April noting that Minneapolis Grain Exchange wheat futures traded in a range of US$0.67 per bushel during the past month. Some support in US wheat values have come from the strength displayed by US soy values, the CWB said.

International wheat values were mixed during the past month. European and Australian values held steady while Black Sea values were supported by strong government intervention prices.

Over the last month, basis levels for spring wheat also have weakened significantly on relatively weak demand, although they still remain above the long-term average.

The CWB said the large carry-in of global wheat stocks will result in the total world wheat supply for 2009-10 increasing, which continues to weigh on the price outlook.

Crop prospects in the Black Sea region are favourable, with little winterkill and good yield potential.

The PRO for milling quality durum was lowered by C$15 per metric ton.

The CWB said the nearby durum market has shown some strength on limited trade over the past month, supported by strong demand from millers. The outlook for new crop remains bearish due to favourable crop conditions in North Africa and strong new crop exports from Mexico.

Beneficial rainfall in North Africa maintained good crop conditions during the critical reproductive growth stage. Global durum production is still expected to decrease slightly from 2008, falling just below the five-year average, the CWB said.

Durum production in North Africa is forecast to increase about 75% from last year, reducing the region's import needs to the lowest level since the mid-1990s. The 2009-10 durum crop in the US is expected to be slightly smaller than the 2008-09 crop but, with larger carry-in stocks, total supply is projected to be higher, which will add pressure to prices in early summer, the CWB said.

The PROs for Pool A feed barley were down C$5 from the March outlook while the price for malting barley was reduced C$7 from the previous report.

The CWB said world barley output was seen declining 3 percent to 5 percent. Barley production in the US was seen dropping 10 percent in 2009. However, large carry-out stocks in 2008 will increase supplies year-on-year.

Barley production in Canada, the EU and Black Sea is forecast to decrease, while production in Australia and Turkey will increase. Global feed-barley supplies will be adequate in the new crop year as consumption is forecast to decline, the CWB said.

Lower freight rates and an increased Canadian dollar narrowed the spread between US corn and western Canadian feed prices this month.

Meanwhile, spring barley prospects remain favourable, the CWB said. Adequate rainfall and above-normal temperatures in the EU have advanced the development of the winter barley crops in Germany and spring field activities across northern Europe. The spread between malting-quality barley and feed barley has narrowed and should remain at more traditional levels in the upcoming crop year.

Demand for malting-quality barley is expected to improve slightly from 2008-09, the CWB said.