Estimated returns for last summer’s wheat crop have sagged during the last three months.
Since March, the last time the Canadian Wheat Board reported its estimates for wheat grown in 1998, projected returns for higher quality spring wheats have dropped $9 to $10 per tonne.
Analyst Don Bonner pointed to the winter wheat crop in the United States as one of the main factors
behind the falling fortunes of wheat.
While the acreage was down from the previous year, the crop is coming off with close to record yields.
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And aside from Manitoba, Saskatchewan and North Dakota, the rest of the globe found weather conditions favorable for growing wheat.
China and India, two key world wheat importers, have good wheat crops of their own this year.
Bonner said price forecasts have also been weakened by the strengthening Canadian dollar.
Fluctuating dollar
In March, the exchange rate ranged from $1.51 to $1.52. Lately, it has strengthened to $1.45 to $1.47, a 300 to 400 basis-point difference.
That means the value of sales made during the March to June period dropped three to four percent in Canadian dollar terms.
In April, the wheat board came under fire from some quarters over a sales strategy that planned for more grain to be sold in the latter half of the crop year.
Despite the drop in estimated returns, Bonner contends the wheat board made the right plans.
“The strategy was a good one,” said Bonner, explaining moving more wheat earlier in the crop year would have led to even lower returns than currently projected.
Earlier in the crop year, the wheat board would have had to price its wheat aggressively to compete with cheaper U.S. and European wheat.
Wheat board spokesperson Deanna Allen said wheat ending stocks will be comparable to the 4.9 million tonnes carried over in the previous year.
