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CWB Raises 2011-12 PROs

The Canadian Wheat Board has increased its projected returns for wheat, durum and barley in its latest Pool Return Outlook (PRO) for the 2011-12 crop year.

Wheat values have increased since last month’s PRO by between $12 and $18 per tonne, depending on class, grade and protein level. Durum values have gone up between $6 and $16 per tonne since the July PRO. Pool A feed barley is up $12 per tonne, while malting barley is unchanged from last month.

The board says there has been a sharp increase in U.S. wheat futures over the past month, largely due to an increase of U.S. corn prices due to tightening stocks.

“If U.S. corn yield follows the industry’s lower expectations and production is less than 13 million bushels, corn prices will provide a floor for wheat prices by encouraging wheat feeding and, in the next production cycle, swap further acres from wheat to the more-profitable corn,” the outlook says.

However, weighing down further upside potential is the third-largest world wheat production of all time. Global production in 2011-12 is estimated at more than 670 million tonnes, driving home the fact that there is no real shortage of wheat this year.

International feed barley prices have increased this month on strong demand from the Middle East and an increase in barley values offered out of Ukraine and Russia. Feed barley prices are expected to remain firm in the nearby, supported by stronger U.S. corn values.

The board says there is significant downside risk for malting barley values when harvest begins in Australia and Argentina.

Malting barley values have remained firm over the last month as harvest results in Europe have shown less-than-ideal quality. Although better than last year, protein results have been higher than desirable, ranging up to and above 13 per cent in some cases.

Despite protein issues, European maltsters will be able to use local supplies of barley as the germination is adequate and quality specs can be adjusted to meet maltsters’ requirements.

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