The Canadian Wheat Board’s first Pool Return Outlook for the new crop nearly cracked the $400 a tonne barrier for top spring wheat.
New crop No. 1 CW red spring wheat 14.5 percent protein came in at $399 a tonne, or $10.86 a bushel at port. No. 1 durum 14.5 percent protein is $470 a tonne, or $12.79 a bu.
The new-crop PROs, released at GrainWorld in Winnipeg Feb. 25, represent a 75 percent increase from the CWB spring wheat outlook released one year ago. The gain for durum is even larger, increasing 93 percent from the first PRO last year.
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“A year ago at this presentation, we were at $5.14 a bu. (for wheat),” said board market analyst Kelly Davey, who gave the CWB wheat outlook presentation for 2008.
In contrast, she said, spring wheat was trading near $23 a bu. on the Minneapolis Grain Exchange as she stepped to the podium for this year’s outlook.
Davey opened her presentation with a summary of the events in the last year that led to the record prices for wheat. She pointed to large U.S. export sales, frost in Argentina and then the lowest U.S. carryout of spring wheat in 30 years, at 59 million bu.
Those fundamentals, combined with continued flow of speculative money into the market, led to the historic highs in wheat on the MGE.
“The commodity complex is so strong … so money has been flowing in (to the futures market) and we expect that to continue,” said Davey.
She said the CWB expects world wheat production will increase by 36.9 million tonnes this coming crop year, which will slightly bump up 2008-09 carryover stocks, but not enough to dampen the market.
For durum, Davey said the CWB projects a 3.9 million tonne increase in world production this year and ending stocks for 2008-09 should reach four million tonnes, up from three million in 2007-08.
However, a key factor is North African production because that durum growing region needs spring rain to combat low soil moisture.
As for Canadian production, the board noted farmers have already planted more winter wheat and it forecast durum acres this spring would increase by 27 percent to 6.1 million.
Acreage of other major spring wheat classes are forecast to be steady to lower because of competition from other high-priced crops.
