News Column

CWB PROs Lower for Wheat in Latest Outlook for 2014-15

April 24, 2014



WINNIPEG, Manitoba, April 24 -- The Canadian Wheat Board issued the following news release:

CWB today released its Pool Return Outlooks (PROs) for the 2014-15 pools and Futures Choice pools. Compared to the last PRO release on March 27, projected wheat returns are $8 to $9 per tonne lower. Projected returns for durum, canola, malt barley and field peas remain unchanged.

See table here (http://www.cwb.ca/news/94/cwb-pros-lower-for-wheat-in-latest-outlook-for-2014-15).

Note: PROs are provided as price indications based on current nearby and forward markets. They are calculated basis track west coast or Thunder Bay ports, net of all projected operating costs, including CWB's pool management fee. Volatile market conditions may affect the PROs significantly. PROs are not price guarantees and should not be confused with initial payments. Farmers should consider entering pool contracts as an excellent risk-management tool that provides a solid return from the entire pooling period.

To calculate pool returns backed off to the farm, farmers should factor in country deductions that they negotiate directly with grain handlers. These deductions may vary at different times of the year.

PRO commentary

2014-15 pools

Wheat

Current Minneapolis wheat futures prices for the December 2014 contract through to the summer of 2015 are in the range of $7.40 to $7.55 U.S. per bushel, which is down slightly from the last PRO release. While dryness and freeze damage has reduced U.S. Hard Red Winter wheat crop production prospects, there are no other significant wheat production problems globally.

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 less one dollar to plus two dollars per tonne.

Durum

Durum values for 2014-15 have not changed since the last PRO release. Canadian production is expected to decline in 2014, but is being offset by USDA reports indicating an increase in U.S. durum production in North Dakota. However, the durum carry over from 2013-14 is still going to have an impact on global markets. Crops in the Mediterranean are doing well even though there was less seeded area, particularly in France, which could result in slightly lower crop production. Durum regions of North Africa also continue to have good growing conditions given the cool and dry weather in recent weeks.

Malting barley

International barley prices have remained stable since the last PRO release as a result of continued demand by China for malting barley and the decline in world barley seeded acres. Offsetting these factors is the recent rains last week in Australia, which helped improve soil moisture levels.

Canola

Canola futures prices were up significantly in the beginning of April but have fallen off since last week. Some of the factors expected to pressure 2014-15 markets include the massive carry out forecasted for Canadian canola in the 2014-15 crop year and continuing historically high seeded area in Western Canada.

Field Peas

Markets remained relatively stable for peas over the last month. Estimated production levels in Canada are expected to increase in 2014-15 from last year's numbers.

General pool assumptions:

* Canadian dollar at 90 cents versus the U.S. dollar.

* Current forward futures structure for wheat and canola.

* The Early Delivery Pool reflects activity through the first half of the crop year, with sales to be executed by the end of February 2015 (farmer deliveries by the end of January).

* The Annual Pool reflects activity through the entire crop year, with sales to be executed by the end of August 2015 (farmer deliveries by the end of July).

* The Winter Pool reflects activity through the second half of the crop year, with sales to be executed by the end of August 2015 (farmer deliveries by the end of July).

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