Slow demand and improved production in some major wheat exporting nations have knocked Pool Return Outlook prices down, regardless of poor conditions in Canada and the European Union.
But poor prairie growing conditions have driven durum prices higher, highlighting Canada’s dominance in world durum trade.
“Really sluggish demand is continuing to weigh on prices,” said Canadian Wheat Board analyst Dwayne Lee.
Wheat prices are down by up to $6 per tonne in the Aug. 23 PRO compared to one month earlier, due mainly to rain, which improved growing conditions in the U.S. hard red spring wheat area, and saved the crop in Australia.
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But poor European crops are mitigating some of the price damage from American and Australian crops. Yields and quality of many types of wheat have been poor in England, France, Spain and Italy.
The United States Department of Agriculture recently reduced its estimate of exportable EU wheat from 15 million tonnes to 12.5 million.
The wheat board will have a smaller crop to market this year, but will probably have lots of high protein wheat on hand.
“Harvest reports are verifying that there are low yields and higher protein” in prairie wheat, Lee said.
Drought conditions tend to increase protein levels in wheat. While high protein is desirable, too much could be hard to sell at a premium.
“It puts pressure on the protein values for the coming year,” said Lee.
The problems in Canada are having only a moderate impact on world prices because Canada does not dominate world wheat exports.
But it’s a different story for durum.
Durum values are $6 to $15 higher in this month’s PRO, mainly due to the small crop in Canada, the world’s largest exporter.
Canadian production is down more than 40 percent this year, and U.S. production has fallen significantly. U.S. production was expected to grow this year.
Strong demand is expected from the European Union and North Africa.
Durum prices were expected to fall from last year, but these increases take price expectations back to about where they were a year ago.
“In some grades we’re expecting even a slight improvement,” said Lee.
The next few weeks will determine the quality of Canadian and northern U.S. crops.
Lee said analysts will be watching U.S. hard and soft red winter wheat acreage, which must be decided soon, for a sign of where supplies may be next summer.
A large section of the hard red winter wheat zone is dry, which may reduce acreage and future production, which would be positive for prices.
