September 25, 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.

 

The Pool Return Outlook, or PRO, for wheat ranged from down C$13 (US$11.93) per tonne to up C$3 (US$2.75) from the August projection, depending on grade and protein level. The crop year began Aug. 1, 2009 and ends July 31, 2010.

 

The CWB said until the harvest is complete, considerable uncertainty remains about both the volume and quality of this year's crop.

 

Despite a very late harvest, yield and quality expectations have improved significantly from a month ago. Commodity markets and currency relationships remain volatile, adding to the overall uncertainty typical of the harvest period.

 

The CWB said the wheat market has been pressured over the past month by large global supplies and the ongoing harvest in the Northern Hemisphere. The US wheat futures markets has dropped between 19 cents and 46 cents per bushel over the past month, and were now trading at levels similar to the beginning of 2007, before the historic grain price rally began.

 

Protein premiums on hard red spring wheat have moved higher given the lower-than-average protein levels of the US HRS crop. The ongoing strength of the Canadian dollar continues to weigh down Canadian-dollar price outlooks.

 

The USDA increased its estimate for world wheat production to 664 million tonnes in the September World Agriculture Supply and Demand Estimate. Production forecasts were increased for the European Union, Russia, Ukraine and Kazakhstan.

 

In Canada, the spring wheat harvest has made good progress under ideal harvest weather conditions. The winter wheat harvest is now essentially finished, with the spring wheat harvest over 60 percent complete.

 

The PRO for durum was down C$25 per tonne from the previous month's forecast.

 

Durum fundamentals have weakened since the last PRO, which has pressured international durum values downward, the CWB said.

 

Generally good harvest conditions and higher-than-expected yields have increased the quality and quantity of North American durum crops.

 

In the US, top-grade durum values are now below high-protein spring wheat values. The durum harvest remains slightly delayed in the US, although the past week allowed significant progress towards harvest completion, the CWB said.

 

In Canada, the durum harvest is 75 percent complete and the quality is above average.

 

The PRO for malting barley was lowered by C$12 per ton while the PRO value for feed barley was down C$9.

 

Malting barley values have been pressured lower by large supplies of quality malting barley in Europe and the ongoing harvest in the Northern hemisphere, the CWB said.

 

Canadian supplies of malting barley are expected to be lower due to a smaller crop. Conditions have been favourable for harvesting and the Canadian barley crop is now more than 85 percent harvested, with initial reports showing a wide variation in crop quality.

 

Large supplies and weak international corn values continue to pressure global feed grain prices, the CWB said. There was a brief rally in CBOT corn futures prices in mid-September when frost was forecasted in the US Cornbelt. However, prices were lowered once that risk had passed.

           

US$1 = C$1.08 (Sept 25)