May 26, 2008

Canadian Wheat Board 2007/08 price outlook for wheat,durum down

The Canadian Wheat Board, or CWB, has lowered its price projection for milling wheat and milling durum that will be sold during the 2007/08 crop year, which began August 1, 2007 and ends July 31, 2008. The price outlooks for barley were left unchanged from the March projection.

The CWB said it lowered its milling wheat PRO's CAN$10 to CAN$22 per tonnerom its March estimate.

The wheat PRO remains at record high levels but has dropped from the last projection in March due to lower current international prices, the CWB said. With a large percentage of the old crop pool now sold, the downward price pressure did not affect 2007/08 values to the same extent as for the new crop outlook.

Although tight world wheat stocks are still a major factor, demand from global wheat buyers has fallen to below normal levels given the current high-price environment. Many buyers are choosing to defer their purchases in hopes of lower prices from the 2008 crop, with production prospects having increased market confidence for the new year, the CWB said.

The CWB said the durum PRO for milling grades was lowered by CAN$29 per tonne from the March estimate.

The weakening market has lowered the durum PRO for the current year's crop, but to a lesser extent than with the 2008/09 outlook, the CWB said. Demand continues to be rationed as buyers wait to see what the new crop year will bring for global durum supplies, which are expected to be significantly higher. An important factor has been the effect of alternative-origin Mexican and US desert durum crops, which have come into the global market more rapidly and in larger volumes than the market expected, influencing prices downward.

The feed barley PRO remains unchanged from the March estimate.

Tight global supply and weak nearby Saudi Arabian demand remain the prevailing fundamentals in this market, the CWB said. New crop prospects remain largely unchanged this month, with a large European crop anticipated.