News of suspended wheat exports in the European Union and a reduced wheat harvest forecast in Brazil came too late to be included in the Canadian Wheat Board’s August Pool Return Outlook.
The PRO instead focused on recent market-depressing forecast of a big American spring wheat crop.
Justin Kohlman, wheat board spokesperson, said Europe’s crop woes might make for a more optimistic September PRO.
“We are beginning to see the results of (European crop problems) in the last day or two,” said Kohlman.
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“So that might be a silver lining in the clouds for farmers down the road, but for this PRO it wasn’t yet taken into account.”
Late last week, Reuters News Agency reported the EU’s cereal management committee had halted international exports of German and French wheat in a move to retain milling-quality wheat from the 1999 crop because of quality concerns for the coming wheat harvest.
“This is a measure of precaution taken to help the European consumer,” the EU official said.
Many of those consumers are in Eastern Europe, which was stricken by drought this summer and is in short supply of grain.
The official said the EU commission judged France’s wheat crop “a catastrophe” in terms of quality.
France is the EU’s largest producer and exporter of wheat.
Cold, rainy weather that had Parisians donning winter coats in July caused serious crop quality problems including a drop in starch content.
The EU would wait at least one or two months to assess the situation more clearly before resuming exports in earnest, the official said.
The EU did open a tender for export for French wheat from stocks harvested before 1999 that are considered lower quality.
Wheat futures markets in the United States rose on the news.
Kohlman noted that Canada is also forecasting a smaller than expected wheat crop this year.
Statistics Canada forecast a crop of 25.418 million tonnes, about one million tonnes less than the U. S. Department of Agriculture forecast that American traders had been watching.
“So if that turns out to be true, that might also lend support to the market down the road,” Kohlman said.
Meanwhile, government forecasters in Brazil say frosts in July have caused the wheat crop there to shrink to 1.526 million tonnes, down from last month’s estimate of 2.63 million and last year’s production of 2.4 million tonnes.
As for durum, the wheat board made no change to the PRO, which reflects expectations of a near record large durum crop in Canada and good supplies in the U. S.
But the board increased its price outlook for designated barley.
“The rains they had in northern Europe have downgraded the quality and amount of European malting barley,” Kohlman said. The drought in southern Alberta and Montana is also reducing expected supplies of two-row malting barley.
Kohlman said the board expects malting barley prices will rise on the reduced supply in Europe, but the forecast could change depending on what happens with the Australian barley crop, which is just coming out of winter dormancy.
“If the Australians have a large crop and market aggressively, it could have an effect on those values,” he said.
