Wheat prices are up slightly in the Canadian Wheat Board’s latest Pool Return Outlook for the 2011-12 crop year.
The price estimates released today range from unchanged to up $6 per tonne over the January PRO depending on the class of wheat.
Milling durum values were unchanged but prices for Nos. 4 and 5 CWAD are up $5 per tonne.
Malting barley values are down $1 to $2 per tonne from the January PRO.
Fears over continued dryness in Western Canada and the U.S. Great Plains kept Minneapolis wheat futures strength, relative to Kansas and Chicago markets. Increased talk of winterkill in Europe and the former Soviet Union is also lending support to Minneapolis wheat.
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World wheat production is forecast at 693 million tonnes, making it the biggest crop of all time. The CWB believes the estimated 213 million tonnes of global ending stocks is not supportive of current futures levels.
The International Grains Council is forecasting 685 million tonnes of global wheat production next year.
The first half of the marketing year has been dominated by aggressive Russian exports, which has limited the pace of U.S. sales. But poor weather has slowed Black Sea exports allowing the U.S. to take advantage of cheap ocean freight rates and step up sales into the Middle East.
The CWB has priced 63 percent of expected 2011-12 wheat deliveries and anticipates to be 97 percent priced by the end of July.
The CWB is forecasting increased North American durum planting and production in 2012-13. Dry conditions have decreased the risk of spring flooding in major growing areas, which wiped out a lot of durum crops last year.
The price spread between durum and spring wheat is “very narrow,” which will dampen acreage expectations in Canada but a favourable crop insurance program will boost plantings in the U.S.
The outlook for durum crops in the Mediterranean basin has improved due to multiple rain and snow events throughout the region.
The price spread over spring wheat is expected to remain narrow unless there is adverse weather in North America, Europe or North Africa.
Malting barley prices are forecast to slowly weaken for the remainder of 2011-12 because Argentina and Australia have abundant supplies of the crop.
European prices are well above international values due to high protein, disease and dormancy problems with the European crop. It has turned to Argentina for imports.
Ample supplies from Canada, Australia and Argentina will more than cover remaining malting barley demand for 2011-12.
If maltsters see a good-sized crop going in the ground in 2012 accompanied by favourable spring weather they may defer demand to pick up new crop supplies at a lower price than today’s values.
