WINNIPEG – Farmers trying to figure out what to grow in 1996 can pencil another year of strong wheat prices into their plans, says the Canadian Wheat Board.
It’s still too early to write those numbers in ink, but board officials say milling wheat prices next crop year should remain close to this year’s record returns.
“It’s a pretty good outlook at this stage for 1996-97, although there’s a lot of uncertainty still ahead,” said Brian White, the board’s director of market analysis.
Other grains not so good
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The outlook isn’t so rosy for other grains sold by the board, with lower prices being forecast for durum, feed barley and malting barley.
White even held out the prospect that prices could surpass this year’s returns, which are expected to be the highest ever in nominal dollars.
World wheat stocks remain so tight that any unforeseen turn of events could cause prices to “absolutely explode”, he said.
Production problems in a major wheat producing area or the unexpected entry into the market of an unpredictable buyer like China or Russia could send prices into uncharted territory.
White made his comments at Grain World ’96, a CWB-sponsored conference that brought together grain industry officials from around the world for two days of market analyses and price prognostications for wheat, coarse grains, oilseeds, special crops and livestock.
The board used the occasion to release its first pool return outlook for the next crop year.
For 1 CWRS wheat, the port price in 1996-97 is expected to be around $235 a tonne, compared with the projected 1995-96 price of $243 a tonne. Farmgate prices reflect deductions for handling and transportation. Other classes of milling wheat are forecast to be down by anywhere from $7 to $10 a tonne.
While the board expects farmers around the world to plant more wheat this year, the market will continue to be driven by tight supplies. The ratio of world stocks to consumption, a key factor in forecasting prices, is forecast at 18 percent by July 1997, only marginally higher than the record low 17 percent in July 1996.
In Canada, the board is projecting a slightly larger crop than last year at 26.2 million tonnes. Exports are projected at about 18 million tonnes, up from 17.3 million this year.
For durum, farmers should be prepared for a “pretty substantial drop” in prices, White said. This year’s high export prices reflect poor crops in North Africa and Europe, a situation unlikely to recur. Prices at export position could be down by anywhere from $24 to $69 a tonne.
Farmers should compare the expected returns from durum and high protein wheat before making their planting decisions, White said.
