The Canadian dollar is rising, which means farmers will get fewer of
them for every bushel of wheat and barley sold on the world market.
The Canadian Wheat Board’s most recent Pool Return Outlook drops some
wheat, durum and barley prices, partly because of the strengthening
Canadian dollar.
Most Canadian western red spring wheat grades are static or $1 to $2
per tonne lower than they were expected to be in the May PRO.
The durum outlook is down, with the reductions ranging from $3 to $8
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per tonne. Malting barley values are off by $5 per tonne.
Feed barley and some specialized wheat varieties are the exceptions,
increasing slightly in value.
The sharp drop in durum expectations is mainly due to the European
Union’s expected record crop and good growing conditions in North
America.
EU supplies are also hurting malting barley price expectations.
Wheat values should be rising, except for the effect of the dollar, the
wheat board says. Production in the United States, Canada, Australia
and Argentina is expected to be low this year, which should be bullish
for prices.
But export sales are made in U.S. dollars, so a stronger Canadian
dollar lowers farmer returns once exchange rates are factored in.
The wheat board locks in the currency exchange rate between Canadian
and U.S. dollars when it makes a sale, so deals already made are not
affected by currency changes.
CWB treasury department official Wendy Thiessen said if the board
hadn’t locked in exchange rate for its sales until now, the recent rise
in the dollar would have hurt the PRO, and farmer returns, much more.
“If we had been unhedged on sales since February … we would be at a
loss,” she said.
