CWB Pros Mixed in Latest 2014-15 Outlook

CWB today released updated Pool Return Outlooks (PROs) for the 2014-15 Annual and Winter pools and Futures Choice pools. Compared to the mid-term PRO released in early November, durum and canola projected returns are lower across all pools, while projected returns for wheat are slightly higher across all pools. Projected returns for field peas and Futures Choice pools remain unchanged.

 

 

Wheat futures prices have strengthened over the past few weeks, recently reaching a three-month high on the back of winter wheat concerns in Russia due to dryness and a small downgrade in the condition of the U.S. hard red winter wheat crop. Current Minneapolis wheat futures prices for the March contract through to December 2015 are in the range of $6.00 to $6.40 per bushel, which are up significantly since the last PRO. The Canadian dollar has also showed strength against the U.S. dollar, offsetting much of the gain in futures.

 

Given current PRO assumptions, farmers in the 2014-15 Futures Choice Annual and Winter pools can expect to achieve a final return for 1 CWRS 13.5 in-store port position made up of the March 2015 futures value they lock in plus $30 and $35 per tonne, respectively. 

 

Durum PRO values are weakening as durum prices have been easing from recent highs. Buyers have adjusted to the reality that is the lower quality durum supply this year. The Canadian dollar has also strengthened since the last PRO, reducing projected pool returns. At the country elevator level, cash bids have also been on the decline.

 

Canola futures prices have been stable to higher since the last PRO but more notably, the forward structure has shifted from an inverse to an almost flat pattern with only slight carry in forward months. Crush and export demand have been running steadily at or slightly above expectations, keeping movement fluid and prices stable. Current canola futures for the January contract through to July 2015 are trading in a narrow range of $427 to $433 per tonne.

 

PRO values for field peas remain stable.

 

 

Canadian dollar at 89 cents versus the U.S. dollar.

Current forward futures structure for wheat and canola.