February 28, 2011 / 5:36 PM / 6 years ago

Canada affirms view for small rise in wheat output

4 Min Read

WINNIPEG, Manitoba (Reuters) - Canada's monopoly wheat exporter maintained its forecast for a small rise in production from the world's No. 3 seller this year, but offered a slightly more upbeat forecast for global output.

The outlook from the Canadian Wheat Board, one of the world's biggest grain marketers, offers modest relief for millers who have been hurt this year by an acute shortage of higher-quality wheat following excessive moisture in Western Canada last year and flooding in Australia.

It also underscores the intense competition among cash crops this year, with wheat still struggling to take acres from canola, corn and soybeans. Production of durum, used to make pasta, is expected to rise by about a quarter in Canada, but will remain flat globally at about 35 million tonnes.

Wheat prices have surged nearly 80 percent since the summer, but corn prices have doubled and remain near post-2008 peaks; wheat is down 7 percent this month.

Canada will harvest about 23.8 million tonnes of all-wheat in 2011, up less than 3 percent from the three-year low of 23.2 million tonnes harvested last year and virtually the same estimate the board released in January, CWB said Monday at its annual Grain World conference in Winnipeg.

The Wheat Board pegged global wheat production at 653.5 million tonnes in 2011, up from 647.5 million tonnes last year, but sharply lower than last week's International Grains Council forecast of 672 million tonnes.

The board's global wheat estimate is the mid-point in a range from 638 million tonnes to 672 million tonnes as uncertainty hangs over Russia's crop this year after severe drought a year ago.

(Graphic:r.reuters.com/vuk38r)

Minneapolis new-crop December spring wheat futures ended higher on Monday, trading not far below the 2-1/2-year peak scaled in mid-February.

Quality Key

The key to shoring up dwindling premium milling supplies will be the quality of the Canadian wheat crop, said CWB North American market analyst Neil Townsend, after it suffered last year from both too much moisture and untimely frost. Canada is the biggest grower of spring wheat.

"A lot of it depends on the planting conditions," he said. "I would say (quality supplies) are not in doubt is we assume average conditions."

The increase in Canadian wheat production will largely come from Ontario's winter wheat crop, which farmers planted last summer in good conditions, while western farmers will plant and produce less of Canada's prized Western Red Spring wheat, Townsend said.

One private analyst said the CWB's modest forecast increase to Canadian all-wheat production looked conservative.

"I would expect CWRS (Canada Western Red Spring wheat production) higher because of the way things look today," said Jonathan Driedger, market analyst with FarmLink Marketing Solutions in Winnipeg. "Wheat still stands up pretty good (against other crops)."

While the board expects farmers to manage to plant more land this year, soaked ground and heavy snowfall make serious spring flooding likely in Saskatchewan and Manitoba.

A second straight year of serious flooding could switch some acres from spring wheat to later-planted cereals like oats and barley, Driedger said.

The Wheat Board pegged Canadian barley production at 8.35 million tonnes, up about 10 percent from last year but still well below the five-year average. World production looks to climb 8 percent to 132.5 million tonnes.

A recovery in production by Black Sea barley exporters Russia and Ukraine looks to limit Canadian sales opportunities to Saudi Arabia, the board said.

Reporting by Rod Nickel; Editing by John Picinich and Sofina Mirza-Reid

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