CWB today released updated Pool Return Outlooks (PROs) for the 2014-15 Winter Pool and Futures Choice Winter Pool. Compared to the last PRO released in December, projected returns for wheat and durum are $25 and $4 per tonne lower, respectively, while projected returns for canola are $16 per tonne higher. Projected returns for wheat Futures Choice are down and canola Futures Choice projected returns remain unchanged.
PRO commentary
2014-15 pools
Wheat
Wheat futures prices have declined considerably since mid-December as a result of weak U.S. exports and markets pricing in the Russian export situation. Corn futures have also been pressuring wheat down since the release of the January WASDE, which although U.S. corn yields were cut from 173.4 to 171 bushels per acre, continues to indicate large corn ending stocks. Current Minneapolis wheat futures prices for the March contract through to December 2015 are trading in the range of $5.80 to $6.10 per bushel, which are down significantly since the last PRO. This was partially offset by the weakening Canadian dollar against the U.S. dollar, but overall the pool returns have decreased.
Given current PRO assumptions, farmers in the 2014-15 Futures Choice Winter Pool can expect to achieve a final return for 2 CWRS 13.0 in-store port position made up of the March 2015 futures value they lock in plus $27 per tonne.
Durum
Durum prices continue to move downwards as a result of easing buyer demand and solid coverage. Since the last tender in late November, durum prices have declined approximately US$25 per tonne. The Canadian dollar also continues to weaken since the last PRO release. Overall, the projected pool returns are lower.
Canola
Canola futures prices have increased since the last PRO as ending stocks are projected to fall in 2014-15 and 2015-16. The forward structure continues to show an inverse. Current canola futures for the March contract through to July 2015 are trading in a narrow range of $460 to $445 per tonne, which is up since the last PRO release.
General pool assumptions:
Canadian dollar at 81 cents versus the U.S. dollar.
Current forward futures structure for wheat and canola.