2014-15 CWB Pros Lower In Latest Outlook; Exception Nos. 1 & 2 Durum and Wheat Futures Choice Pools

CWB today released its Pool Return Outlooks (PROs) for the 2014-15 pools and Futures Choice pools. Compared to the last PRO release in August, wheat and durum spreads have widened significantly between grades. Projected returns are down across all pools for wheat, canola and field peas, with the exception of the wheat Futures Choice pools which are up. Durum projected returns on the other hand are higher across all pools for 1's and 2's, while 3's are lower. Malt barley projected returns remain unchanged across all pools.

 

 

Quality continues to be a major concern in Western Canada as poor weather conditions continue to hamper harvest. During the month of September crops have been impacted by excess moisture and an early frost across the Prairies, as well as an untimely snowfall in parts of Alberta. In North Dakota, a similar weather pattern has occurred, however the spring wheat crop is grading slightly better than the Canadian crop. Current Minneapolis wheat futures prices for the December 2014 contract through to December 2015 are in the range of $5.30 to $6.00 per bushel, respectively, which are down significantly since the August PRO. In September, futures prices set new contract lows not seen since the summer of 2010. The negative impact of weaker futures prices on the PRO has been largely offset by the weakening of the Canadian dollar along with considerable strengthening in wheat export basis levels over the past month.

 

Given current PRO assumptions, farmers in the 2014-15 Futures Choice Pools can expect to achieve a final return for 1 CWRS 13.5 in-store port position made up of the December 2014 futures value they lock in plus $33, $30 and $35 per tonne for the Early Delivery, Annual and Winter pools, respectively.

 

Durum values have held firm against the backdrop of lower prices for wheat due to poor weather conditions in Canada, lack of quality in Europe and poor U.S. logistics. Harvesting in Western Canada continues to lag compared to last year’s pace, with less than 40 per cent of the harvest complete. Durum quality is also a serious concern in Western Canada due to wet conditions that prevailed through late August and early September.

 

 

Harvest is nearing the halfway mark in Western Canada, after untimely rains in late August and early September halted production. The mid-September frost that occurred across the Prairies had a minimal impact if any on the crop given that it occurred after the growing season. The big story continues to be the soybean complex, which is dragging down canola prices. Since July, soybean futures have been in a freefall as a result of abundant supplies expected to be harvested in the U.S. Corn Belt and around the world. Current canola futures for the November 2014 contract through to July 2015 are in the range of $400 to $430 per tonne, which are down significantly from the August PRO.