Ceylon, Sask., farmer Ed Bolton came to Winnipeg to find out what he could reasonably expect to get for the wheat crop he’ll soon plant.
The Canadian Wheat Board’s first Pool Return Outlook for the 2005-06 year sent shivers down his spine.
“It kind of makes me shudder,” said Bolton, who attended the wheat board’s Grain World conference Feb. 28-29.
“It’s a tough one to comprehend, with prices already so low.”
The board expects spring wheat prices to drop even lower in 2005-06 than they did in 2004-05.
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It expects $5.23 per bushel for
No. 1 Canada Western Red Spring wheat with 13.5 percent protein in 2005-06, down from $5.55 this year. Those are in-store Vancouver prices, so grain handling and shipping charges have to be subtracted to get a farmgate price.
The board expects No. 1 Canada Western Amber Durum with 13 percent protein to fetch $5.39 per bu., compared to $5.74 this year.
Malting barley should drop to $3.70 per bu. compared to $3.88 for two-row barley and to $3.44 from $3.57 per bu. for six-row.
Even feed barley, the price of which fell most dramatically in 2004-05, will see further declines, the wheat board expects. It forecasts $2.42 per bu. compared to the present PRO of $2.55.
CWB market analyst Dwayne Lee told the Grain World conference that a constellation of factors gives wheat a poor outlook.
Significant weather problems in a major exporting country could make the price outlook more favourable, but normal weather will continue to beat down wheat’s value in world markets.
Lee said wheat stocks of the major exporting nations are expected to grow again, reaching 55.2 million tonnes.
China’s wheat stocks have fallen, but overall wheat stocks have returned to the level they reached in 2001-02. The wheat board is expecting large European Union stocks to increase further, although an EU official at the conference said she thought Lee’s projections for EU production were too high.
Lee said the key question of the coming year is how much China will buy.
Right now the wheat board is projecting that China will buy about as much in 2005-06 as it did last year.
Because of low supplies of high quality wheat this year, premiums for upper grades have been good, but with normal weather those premiums will fall, Lee said. The low 2005-06 PRO prices will probably push some producers into seeding more canola acres, said independent market analyst Brenda Tjaden Lepp.
“Farmers may up their canola acres to the extent they can lock in a profit now,” she said.
Bolton said the wheat board’s projections were disappointing after a long, hard winter of poor prices for a low quality crop.
“We’re really struggling already with the frost that happened in our area,” said Bolton. “I’d been hoping that if we grew a quality crop this year it would be worth something.”
