By Regina Leader-Post
After a relatively long period of higher grain prices, the bubble appears to be bursting, on news that more grain is coming on to world markets, according to a variety of reports, including those from Statistics Canada and the Canadian Wheat Board.
December 19, 2008
Grain prices are retreating as more grain is coming onto world markets already beset by uncertainty, according to the Canadian Wheat Board's pool return outlook (PRO) for December.
"World grain markets continue to be impacted by large crops, cautious buyers and economic uncertainty,'' the CWB said Thursday. "Currency volatility is injecting tremendous uncertainty into grain prices, including the CWB PRO."
PROs are the CWB's estimate of crop year returns and are not to be confused with initial or final payments by the CWB.
Most wheat price estimates for the 2008-09 crop year have dropped between $2 and $15 per tonne, depending on grade, compared to the November PRO.
Durum PROs are down $4 to $6 per tonne, malting barley has declined by $4 per tonne, while feed barley is down $3 per tonne.
"Record global wheat production and uncertainty in the world's financial markets continued to pressure wheat prices during the past month," said the CWB.
Earlier this month, Statistics Canada increased its estimates of the domestic wheat crop by four per cent to 18.4 million tonnes, while the United States Department of Agriculture (USDA) recently projected global wheat production to increase by two million tonnes to 684 million tonnes.
US wheat futures traded lower in early December, with only modest recovery, leaving the futures values either level or slightly down since the last PRO. The Australian harvest is approximately 75 percent complete and rain has negatively affected some of the wheat crop quality.
Concerns are increasing about the impact of possible Russian grain export subsidies, especially for the lower-quality segment of world trade, which could push prices lower.
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