During a week where increasing public attention focused on poor farm income prospects, the latest price prospects for wheat and barley were welcome news.
The Canadian Wheat Board is recommending increased initial payments for the crops it sells, based on strengthening world prices.
It’s hard to tell how much money this will put in farmers’ pockets, and when it will get there.
The board sends its recommendations to the federal government, where officials check to make sure the increases are not so great that they pose a risk to the revenue sharing pools.
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The minister responsible for the Canadian Wheat Board then announces the increase, said Derek Sliworsky, marketing manager in the wheat board’s sales department.
This is the second month in a row for brighter pool return outlooks. The weak Canadian dollar continues to support cereal grain values.
Since September, price forecasts for higher quality wheats have risen by as much as 15 percent.
In fact, the midpoint of the price forecasts for red spring wheats is up to $10 per tonne higher than last year’s estimated pool return.
For example, the estimated return for No. 1 CWRS for 1997-98 is $185 per tonne. This year’s forecast for the same grade is $180 to $210 per tonne.
The 1996-97 final payment for No. 1 CWRS was $208.20 a tonne.
Sliworsky said it’s starting to look like world wheat supplies will be getting tighter into next crop year, according to estimates from the International Grains Council.
The United States is giving 1.5 million tonnes of wheat to Russia in food aid. Weather problems are lowering production prospects for Australia, Argentina and
Europe.
However, lower quality wheats are still suffering from stiff competition from the abundant world supplies of similar wheats.
Price forecasts for prairie, winter and soft red wheats have risen since September, but rest at levels somewhat below estimated returns for last year’s crop.
Although it’s still early to make predictions, Sliworsky said it looks like farmers in the United States and Europe will plant smaller wheat crops next year.
With less production and similar demand, stocks could fall to 1996-97 levels, and prices could rise accordingly, Sliworsky noted.
He will be watching for the U.S. Department of Agriculture first estimates of the winter wheat crop on Jan. 12 for clues to the future direction of wheat prices.
Durum price forecasts have moved up slightly from last month, but are still about $85 per tonne lower than estimated returns from 1997-98.
Despite large world supplies and weak demand for durum, U.S. farmers have given the market some strength because they have been reluctant to sell durum at low prices, said Sliworsky.
A government support program has helped them keep durum in their bins.
“It’s hard to gauge what their cash flow needs are and when it will come to market,” said Sliworsky. “It could be tough sledding in this market if they do decide to market all at once.”
