Canada’s monopoly wheat exporter maintained its forecast for a small rise in production from the world’s No. 3 seller this year, but offered a slightly more upbeat forecast for global output.
The outlook from the Canadian Wheat Board, one of the world’s biggest grain marketers, offers modest relief for millers who have been hurt this year by an acute shortage of higher-quality wheat following excessive moisture in Western Canada last year and flooding in Australia.
It also underscores the intense competition among cash crops this year, with wheat still struggling to take acres from canola, corn and soybeans. Production of durum, used to make pasta, is expected to rise by about a quarter in Canada, but will remain flat globally at about 35 million tonnes.
Wheat prices have surged nearly 80 per cent since the summer, but corn prices have doubled and remain near post- 2008 peaks; wheat is down seven per cent this month.
Canada will harvest about 23.8 million tonnes of all wheat in 2011, up less than three per cent from the three-year low of 23.2 million tonnes harvested last year and virtually the same estimate the board released in January, CWB said Feb. 28 at its annual GrainWorld conference in Winnipeg.
The board pegged global wheat production at 653.5 million tonnes in 2011, up from 647.5 million tonnes last year, but sharply lower than the recent International Grains Council forecast of 672 million tonnes.
The board’s global wheat estimate is the midpoint in a range from 638 million tonnes to 672 million tonnes as uncertainty hangs over Russia’s crop this year after severe drought a year ago.
The key to shoring up dwindling premium milling supplies will be the quality of the Canadian wheat crop, said CWB North American market analyst Neil Townsend, after it suffered last year from both too much moisture and untimely frost. Canada is the biggest grower of spring wheat.
“A lot of it depends on the planting conditions,” he said. “I would say (quality supplies) are not in doubt if we assume average conditions.”
The increase in Canadian wheat production will largely come from Ontario’s winter wheat crop, which farmers planted last summer in good conditions, while western farmers will plant and produce less of Canada’s prized hard red spring wheat, Townsend said.
One private analyst said the CWB’s modest forecast increase to Canadian all-wheat product ion looked conservative.
“I would expect CWRS higher because of the way things look today,” said Jonathan Driedger, market analyst with FarmLink Marketing Solutions in Winnipeg. “Wheat still stands up pretty good (against other crops).”
While the board expects farmers to manage to plant more land this year, soaked ground and heavy snowfall make serious spring flooding likely in Saskatchewan and Manitoba.
A second straight year of serious flooding could switch some acres from spring wheat to later-planted cereals like oats and barley, Driedger said.
The board pegged Canadian barley production at 8.35 million tonnes, up about 10 per cent from last year but still well below the five-year average. World production looks to climb eight per cent to 132.5 million tonnes.
A recovery in production by Black Sea barley exporters Russia and Ukraine looks to limit Canadian sales opportunities to Saudi Arabia, the board said.