HUSSAR, Alta. – Lower grain prices are forecast this year unless there is a significant weather problem among Canada’s competitors.
Record wheat production of more than 600 million tonnes around the world has driven down prices, said Canadian Wheat Board analyst Peter Watts during the board’s Grain Days seminar in this central Alberta town.
“There’s some good news on the market but really the bearish news outweighs the bullish news.”
And, don’t expect any last minute price rallies, he said.
China harvested a record 121 million tonnes, the European Union grew 95.8 million tonnes, India reported 68.7 million tonnes, the United States grew 68.8 million tonnes, Canada 23.5 million tonnes and Australia 19 million tonnes. This leaves the world’s year-ending stocks for 1997-98 at 130 million tonnes, up from 109 million in 1996-97.
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With those kind of numbers, analysts are watching the weather to see if there are any widespread effects on this year’s crops.
A fall drought in China may cause significant yield loss.
“We won’t get the results until May or June,” said Watts.
Unusually warm European weather could turn out deadly if a cold spell strikes and kills wheat crops.
Durum outlook bright
On the durum side, prices have been higher partly because of production problems in North Africa, where yields were lowered by 50 percent.
In response to better prices, durum production is expected to go up by 16 percent this year, said Watts.
Overall, coarse grain production is down with tight year-ending stocks. This could improve prices as the year continues.
Feed barley exports have increased with the introduction of minor exporters like Russia, Ukraine and Turkey, all offering competitive prices.
There is also a lot of feed wheat available. Even though wheat production was high, weather problems in some areas downgraded it to feed quality. A good U.S. corn crop is also jockeying for position with barley.
Malting barley prospects are better. World trade has more than doubled from 1.7 million tonnes in 1992-93 to 3.7 million tonnes in the last crop year.
Canada exported 1.5 million tonnes and Australia sold 1.3 million tonnes.
The outlook for malting barley should remain relatively strong for six row malting barley. There is good interest in Canadian malting barley from American brewers because their growers had difficulties with fusarium blight.
The world two-row barley price is expected to remain flat.
