CWB Grain Price Forecast

The Canadian Wheat Board (CWB) has released its latest Pool Return Outlook (PRO) for the 2010-11 crop year. Wheat values have declined slightly from last month's PRO, with most values dropping between $1 and $7 per tonne, depending on class, grade and protein level. Milling quality durum values are down by $5 per tonne since the June PRO. Barley remains unchanged, reflecting its nearly sold status.
While the wheat, durum and designated barley 2010-11 pools are largely priced at this time of the marketing year, they are not fully sold and there remains a considerable volume of grain to be receipted from farmers and shipped to buyers. With the current financial problems affecting the world's economy, volatile foreign exchange relationships and grain market prices are contributing more-than-typical levels of uncertainty to the pool return estimates.
Projected wheat pool returns decreased slightly as the current market worked its way down over the last month. The impact of lower world wheat prices, caused by an increasing supply of world wheat, negative macro-economic influences and a strong Canadian dollar, has been limited due to high proportion of pool that has been priced and executed.
Quality spreads have widened further this month as recent sales captured the high-protein premiums that were in the market. Premiums have now begun to degrade in anticipation of a higher-quality North American harvest, but will have a minimal impact on projected pool returns from this point forward.
While durum prices have weakened considerably over the past month, adjustments to the durum pool return outlook were relatively minor due to the highly sold status of the pool. Although projected durum production in Western Canada is up considerably from last year, the much smaller crop in the US is expected to result in a smaller than average North American durum crop. Improved growing conditions in durum-growing regions of North Dakota and Saskatchewan caused downward pressure on durum prices during the past month. The European harvest is complete, which has added additional downward pressure on durum prices. The stronger Canadian dollar also contributed to reduced pool returns.
Feed barley
Both malting and feed barley PROs remain unchanged this month. Market price declines since the last PRO have not materially affected these pools, as they are very close to fully sold with the majority of farmer deliveries receipted and shipped to customers.