The outlook for wheat prices got a little dimmer with the latest market forecast from the Canadian Wheat Board.
The agency is pinning at least part of the blame on the Sept. 11 terrorist attacks in the United States.
“That has created additional uncertainty in the market,” said Dwayne Lee, market analyst for the board. “However the full impact won’t be known for some time.”
In its September Pool Return Outlook the board reduced the anticipated 2001-02 return for wheat by around $13 a tonne for Canadian Western Red Spring wheats and $6 a tonne for red winter, soft white spring and Canada Prairie Spring.
Read Also
Canada’s plant hardiness zones receive update
The latest update to Canada’s plant hardiness zones and plant hardiness maps was released this summer.
But while it might be tempting, farmers can’t lay all the responsibility for lower prices on the terrorists.
“I think that was a pretty minor factor here,” said Glenn Lennox of Agriculture Canada’s market analysis division. “Even before that happened, we thought the PRO was untenable as it was.”
Analysts had expected wheat prices to rally at the conclusion of the U.S. winter and spring wheat harvests, but they didn’t. The problem is that even though wheat stocks are coming down, world supplies remain high, especially in the major exporting countries, and importers are continuing to buy hand-to-mouth.
“That has typically spelled weakness for markets,” said Lee.
The long-term fallout from the terrorist attacks remains to be seen and there are various theories as to what might happen.
Fear of war might prompt some countries, especially in the Middle East, to start buying wheat and stockpiling, which could push prices up. There is no evidence yet of that happening.
Conversely, wheat is a staple food and generally speaking trade carries on regardless of political developments.
“If indeed hostilities do break out, we may see something happen, but it may be just as likely to be positive as negative,” said Lennox.
Lee said a number of other factors were at work in the board’s decision to scale back the wheat PRO.
There is lots of good quality, high protein wheat in North America, which limits the prospect for price increases in that market. So far, winter wheat planting in the U.S. has gone well. Export movement of U.S. wheat has been slow. And production estimates have been increased for minor exporting regions such as Russia, Eastern Europe and Ukraine.
However, the board is still optimistic that tightening global supplies will push up wheat prices.
Lennox said the thing to keep an eye on over the next few weeks will be the progress and success of winter wheat seeding in the U.S. and Europe. If things go well, as seems to be the case right now, that could put more downward pressure on prices.
For other grains, the board increased the PRO for durum, particularly for lower grades, reflecting tight supplies.
The board had already bumped up the PRO for feed barley by $13 a tonne, due to smaller North American crops and limited export supplies in Canada.
Designated barley was increased slightly. Lower production and a strong feed market will reduce exportable supplies, while crops in the European Union and Australia are expected to be good.
