May 30, 2011

Canadian Wheat Board revises up outlook for wheat prices

In the Canadian Wheat Board's latest round of pool return outlooks, values for both new- and old-crop wheat and durum are boosted on lower production prospects for the 2011-12 wheat crop.

Wheat values in the CWB's May 2011-12 PRO, out Thursday (May 26), are up by between CAD10 (US$10.24) and CAD16 (US$16.38) per tonne from April levels, while durum values are up by CAD10-CAD14 (US$10.24-US$14.34), malting barleys up CAD22 (US$22.53) and feed barley up CAD6 (US$6.14).

In the May 2010-11 PRO, also released Thursday, production concerns have spurred more "modest" increases in values, with wheat ranging from flat to up CAD6 (US$6.14) per tonne, durum up CAD6 (US$6.14) and barley values flat at April levels.

"Wheat has been primarily supported by increasing weather concerns in the Northern Hemisphere crop," the CWB said in its 2011-12 PRO commentary.

Among those concerns are persistent droughts in the US Southern Plains and Europe, depleted subsoil moisture from last year's droughts in Russia and Kazakhstan, and excess moisture and flooding in North Dakota, Manitoba and eastern Saskatchewan that have delayed seeding past optimal dates.

So far, the CWB said, it has priced about 2% of the expected 2011-12 crop year deliveries of wheat, and expects to have about 25% priced by the end of September. About 85% of expected 2010-11 deliveries are priced, the board added, expecting to have about 97% priced by the end of July.

Because of sales to date, wheat price increases are "modest" in the 2010-11 pool, the CWB said. The old-crop market at this time of year is normally more focused on harvest pressure from new-crop wheat, the board said, but given recent concerns over the new crop, "this year is different."

In the May 2011-12 PRO, No. 1 Canada Western Red Spring (CWRS) at 14.5% protein is pegged at CAD363 (US$372) per tonne, up CAD11 (US$11.26) from April. No. 3 CWRS is up CAD14 (US$14.34) per tonne at CAD295 (US$302), while No. 1 Canada Prairie Spring Red (CPSR) is up CAD16 (US$16.38) per tonne at CAD292 (US$299). CW feed-grade wheat is up CAD10 (US$10.24) per tonne at CAD241 (US$247).