May 26, 2008

 

Canada lowers wheat price outlook for 2008-09

 

 

The Canadian Wheat Board has lowered its price projections for wheat and durum that will be delivered by producers during the 2008-09 crop year which begins Aug. 1, from an April outlook.

 

The Pool Return Outlook for the various wheats were lowered CAN$23.00 per tonne from the April projection.

 

The CWB said spring wheat markets continued their decline during the last month, with new crop futures dropping more than 50 cents per bushel.

 

Winter wheat conditions in the US, Europe and the Black Sea region have stabilized or improved over the past month, further pressuring international wheat values.

 

Demand for old crop wheat has also been limited as buyers await the arrival of new crop wheat, the CWB said.

 

On May 9, the USDA predicted a new record for world production of 656 million tonnes, 5 percent higher than the previous record set in 2004-05.

 

Wheat production was expected to be higher for all major wheat exporters except Argentina.

 

The CWB said the chief supportive factor for wheat during the past month has been continuing high corn prices which are providing some price support.

 

Milling durum values fell by CAN$39 per tonne.

 

New crop durum supplies from Mexico and the southern US have weighed on international durum prices during the past month, the CWB said. Higher international durum prices have attracted more Mexican durum supplies to the export market, increasing nearby pressure on prices. Demand has slackened as end users respond to high prices by reducing the amount of durum in their products.

 

North African and European crop prospects have been mixed, with conditions in North Africa deteriorating over the past month, the CWB said. European crops, however, have had beneficial moisture across the key growing areas. Although North American plantings are significantly higher than last year, prolonged dryness is causing some concerns about new crop prospects.

 

Designated barley PRO values were left unchanged from the April projection.

 

Malting barley prices were mixed during the past month, with prospects for a larger European crop weighing on prices, the CWB said. Malting barley values in the EU will remain sensitive to the quality of the harvest, as carry-in stocks are very low.

 

Planting conditions in North America remain mixed, with southern areas of Canada and parts of the western US remaining very dry, the CWB said.

 

Although areas in Western Australia have received timely planting rains, conditions in the eastern growing areas of Australia remain very dry, causing some uncertainty about new crop supplies.

 

The feed barley PRO was left unchanged from the previous month.

 

Feed barley prices were mixed over the last month as high corn values supported North American prices, the CWB said. Prospects for a larger barley crop in Europe and the Black Sea region have pushed values lower in those countries. Global barley production is forecast by the USDA to be significantly higher than last year.