While combines roared across hard red winter wheat fields in southern Kansas last week, the Canadian Wheat Board lowered its price estimates again for wheat.
It’s the time of year when markets mind the weather, and all eyes are on the North American crop, said wheat board analyst Derek Sliworsky.
While wet weather and flooded land make headlines here, markets are anticipating close-to-record yields in the United States hard red winter wheat crop, the largest exported wheat crop in the world.
Sliworsky said the sheer volume of the U.S. crop is weighing on all world wheat markets.
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“The U.S. is the main market of price discovery. It’s pretty visible.”
The pool return outlook for No. 1, 2 and 3 red spring wheats fell the most, at $8 to $9 per tonne.
But the outlook for red spring wheat with 13.5 percent protein fell $5 to $6 per tonne. High yields in the U.S. crop will mean lower protein, explained Sliworsky, meaning the price of Canadian high protein wheat is holding up better than lower protein grain.
The price estimate for No. 1 red spring wheat with 13.5 percent protein is $187 to $217 per tonne, with a mid-point of $202 per tonne. This is $10 per tonne lower than expected returns for the 1998-99 wheat crop.
While world supplies of wheat will get somewhat tighter this year compared to last year’s ending stocks, supplies will still be ample, said Sliworsky.
The International Grains Council estimates ending stocks at the end of 1999-2000 will be 18 million tonnes tighter than last year, while the U.S. Department of Agriculture estimates they will be 20 million tonnes smaller.
“But still, when you look what’s in the hands of the major exporters … it (carryover) is still 49 million tonnes,” Sliworsky said, quoting USDA projections.
“It’s really a buyer’s market right now,” he added, since the five major world wheat suppliers will all have ample quantities of wheat to sell this year.
World wheat markets are not paying attention to seeding delays in Western Canada, nor the large area in southwestern Manitoba and southeastern Saskatchewan where farmers may not be able to seed. In the global picture, these seeding problems are insignificant, said Sliworsky.
“The market isn’t really going to care, even though we will here in Canada,” he said.
Keeping tabs
But the wheat board is watching seeding progress closely, since it may affect the grades it has available for customers.
The wheat board might have to target some buyers who will pay a good price for lower quality wheat instead of some customers who want higher quality wheat but won’t pay much of a premium, he said.
If two million acres are left unseeded, as some predict, the wheat board will have to make its sales program smaller.
“Our marketing plan is changing on a daily basis,” he said.
Current pool return outlooks assume normal seeding weather from May 27 onwards.
