Many prairie hallmark crops are likely to be big moneymakers this year.
Wheat, durum and canola all look like market favourites at a time when the grain complex is riding high.
Wheat prices are tickling records at U.S. exchanges, durum prices projected by the Canadian Wheat Board are at very high levels, and canola’s price is strong relative to soybeans, the vegetable oil crop market dominator.
Last week’s Statistics Canada production report scared buyers around the world and drove up prices. Weather problems across most of the Canadian Prairies and northern U.S. states have sparked fears of shortages for spring wheat, durum and canola.
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The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
“We’re going to see the market intently interested in the production estimates here on out,” said CWB weather analyst and acting market analysis chief Bruce Burnett.
StatsCan reported a smaller prairie all-wheat crop than the market expected, at 18.7 million tonnes compared to 22.4 million last year.
The durum crop is larger than last year, but spring wheat production on the Prairies is forecast at only 13.65 million tonnes, well down from the 18.16 million tonnes produced last year.
Both the spring wheat number and the durum number surprised the market, coming in lower than expected and setting off the price rally.
While wheat prices surged on U.S. exchanges, the effect was not directly revealed in the wheat board’s Pool Return Outlook, which reflects a year long average price.
Still, the PROs were up sharply from just a month ago, with the highest grades of spring wheat expected to bring more than $7 per bushel at port, and durum to bring from $8.50 to $9 per bushel.
Malting barley PROs are $5.60 to $5.70 for two row and $5.01 to $5.12 for six row.
StatsCan’s canola production estimate of 9.2 million tonnes did not surprise the market.
The size of the canola crop is not a problem, given strong expected demand, and the price should remain high relative to soybeans.
Soybean prices have fallen since a mid-July peak, but canola has stayed within the upper reaches of summer prices.
Don Roberts of Ag Commodity Research thinks canola’s strength is due to biodiesel demand, anticipated export sales and low farmer sales.
Canola has held its traditional premium to soybean prices even though the Canadian dollar has soared against the American currency.
While canola’s traditional strength, its high oil content, has supported that crop’s price, Canadian wheat’s traditional advantage, high protein, may be less of a factor this year.
“We’re in a (worldwide) wheat shortage, so the proteins aren’t going to be that much more valuable than regular wheat,” said Burnett.
