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CWB chief predicts stable prices in 2009

World wheat, durum and malting barley prices will stabilize over the next 12 months and be “reasonably high” through 2009, according to Ian White, president and CEO of the Canadian Wheat Board.

“Volatility should be reduced by increased stocks in the world, but any significant production or supply side shocks to the system… will reflect immediately in increased volatility and higher prices in our view because stock levels are still relatively low,” White told about 150 people attending the CWB’s annual breakfast during Ag Days Jan. 22.

“While prices have come down considerably (since the records set early last year) they haven’t come down to what you saw in the early part of the 2000s.”

The world financial crisis is affecting grain markets, White said. Futures speculators, who pulled out of the market earlier are slowly returning. And while the world harvested a record 683 million tonnes of wheat in 2008, boosting stocks, they aren’t burdensome, White said. The CWB is forecasting less wheat production this year due to reduced plantings. Production should be more in line with consumption.

While the CWB plans to sell 09, but Canadian stocks were all of the wheat farmers offer to drawn down last crop year when deliver this crop year, the same record prices were set. doesn’t hold for durum. Western Barley is under pressure, in Canadian farmers harvested 5.5 part from increased supplies in million tonnes of durum last Australia, White said. fall and the world only trades The world’s slumping economy 7.1 million tonnes. Canadian hasn’t been all bad. For example, durum stocks will rise in 2008-ocean freight rates have plunged. A year ago the daily hire rate for a Panamax vessel in the Pacific was $100,000 a day, which worked out to $50 to $100 a tonne on CWB grain, depending on its destination. Now the rate is just $1,672 a day – much less than it costs to own and operate a ship.

That’s made the CWB more competitive into Middle East grain markets, where traditionally the Australians have a freight advantage. But it cuts both ways. Now the Auzzies are more competitive in some of Canada’s traditional markets.

White said farmers shouldn’t expect a return any time soon of the unprecedented record high prices recorded a year ago. The volatility of last year’s wheat market was historic. Last February the price hit $24 a bushel – triple the previous record of $7.32 set at the Minneapolis Grain Exchange in 1996.

Not much wheat was sold at that price and it quickly fell. Most farmers in the U. S. sold at $6 to $7 a bushel. The same in Canada for wheat priced outside the CWB’s pool, White said. [email protected]

About the author

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Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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