News Column

2014-15 CWB PROs Mostly Lower in Latest Outlook; Durum Higher

June 26, 2014



WINNIPEG, Manitoba, June 26 -- 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 in May, projected wheat returns are $25 to $26 per tonne lower, while projected returns for durum are $10 per tonne higher across all pools. Canola projected returns for Early Delivery and Annual pools are $18 per tonne lower, whereas the Winter Pool is $15 per tonne lower. Malt barley and field peas projected returns remain unchanged

See table here (http://www.cwb.ca/news/102/2014-15-cwb-pros-mostly-lower-in-latest-outlook;-durum-higher)

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

With planting all but complete in Canada, conditions remain favourable for North American production overall, especially for U.S. corn and soybeans. However, wet conditions in Saskatchewan and Manitoba will likely have resulted in two million acres going unseeded in the 2014-15 crop year. Current Minneapolis wheat futures prices for the July 2014 contract through to December 2014 are in the range of $6.70 to $6.95 per bushel, respectively, which are down approximately 60 to 65 cents per bushel from the last PRO release. Coupled with the strengthening of the Canadian dollar against the U.S. dollar this has resulted in a negative impact on the pool returns.

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 one dollar per tonne for Early Delivery Pool and minus two to four dollars per tonne for the Annual and Winter pools.

Durum

The durum markets continue to show strength as a result of excess moisture in Italy and Greece which is causing quality concerns. This has increased demand and prices for higher quality durum. Durum planting in Western Canada and North Dakota is complete.

Malting barley

Overall barley production in the E.U., Australia, Canada and Ukraine are forecasted to be lower, while Russia is expected to produce a larger than normal crop. However, the USDA WASDE projects 2014-15 coarse grain supplies at record levels.

Canola

The drop in the canola PROs is a direct result of the drop in futures prices. The May PRO saw futures around $490 per tonne with no carry in the forward structure, since then futures have dropped $15 per tonne with carry being built back into the forward structure. Canola is presently enjoying strong domestic and export demand.

Canola futures for the Nov 2014 contract through to July 2015 are in the range of $470 to $475 per tonne, which are down from the last PRO release.

Field Peas

Since the last PRO release, prices for field peas have remained relatively firm.

General pool assumptions:

* Canadian dollar at 93 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.

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

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

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