Farmers wondering whether the booming wheat market is ready to go bust got some reassuring news last week.
The latest market report from the U.S. Department of Agriculture confirms that wheat prices will stay strong at least through the 2008-09 crop year, says a Canadian Wheat Board official.
The USDA report pegged 2008 winter wheat acreage in the United States at 46.6 million acres.
While that’s an increase of 3.6 percent from the previous year, it’s well below the average trade forecast of 48.6 million (an increase of eight percent).
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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.
“Planting numbers are not what the trade was expecting,” said Bruce Burnett, director of market analysis for the wheat board.
“The numbers are very supportive for price, especially for the new winter crop, which is only six months away.”
He said the market had been counting on robust supplies from the new crop to replenish the U.S. pipeline, but that no longer appears to be the case, so supplies will remain tight.
As for spring wheat, Burnett said increased winter wheat acres in Montana and North Dakota will eat into spring wheat plantings in those two states, which will be positive for the spring seeded crop.
“There are no significant bearish factors in the market,” he said.
Global wheat plantings are expected to be higher for 2008, but because world stocks are so low that shouldn’t have a depressing effect on the market.
“We’re definitely not talking about going back to the price levels of two or three years ago,” he said. “These current market levels are here for at least another year.”
As for other CWB commodities:
- World durum stocks will likely increase, but remain tight. Acreage is up in some European countries and down in others and things seem to be normal in North Africa. The durum area of North America is very dry. Durum yields in Saskatchewan have averaged less than 30 bushels per acre the past years. The board is expecting a 30 percent increase in durum plantings this spring in response to low stocks and high prices, but another dry year could keep total supplies tight.
- Barley will be supported by strong global coarse grain markets. Black Sea and Australian production will likely rebound from bad years and produce greater supplies, which could have some bearish impact in the feed market. A positive price outlook will continue for malting barley in 2008.
