Newsroom
2005
CWB announces 2005-06 initial payments by grade
Aug. 4, 2005
Winnipeg - The Canadian Wheat Board (CWB) today announced the 2005-06 initial payments for the various grades of wheat and barley. The payments are effective August 8, 2005 for deliveries into the 2005-06 pool accounts.
The initial payments, in dollars per tonne, for base grades in each pool account are listed below. A complete listing of payments for all grades in dollars per tonne and dollars per bushel is posted on the CWB Web site at www.cwb.ca.
|
Grade
|
2005-06
Initial payment |
2004-05
Initial payment |
|
No. 1 Canada Western Red Spring wheat 12.5
|
$127
|
$150
|
|
No. 1 Canada Western Amber Durum wheat 12.5
|
$130
|
$141
|
| Feed Barley No. 1 Canada Western |
$73
(Pool A) |
$74
(Pool B) |
| Designated Barley Special Select Canada Western two-row |
$119
|
$133
|
|
Special Select Canada Western six-row
|
$107
|
$120
|
Initial payments represent the first portion of the returns farmers can expect from the sale of their grain over the entire pool year. The Government of Canada guarantees initial payments.
Initial payments are set in relation to world prices and, as such, will vary from year to year according to changing market conditions. During the crop year, the CWB regularly reviews the initial payments and recommends adjustment payments as soon as market conditions and sales progress warrant.
The attached commentary describes the current market situation. Initial payments should not be confused with monthly Pool Return Outlooks (PROs), which are the CWB's estimates of year-end returns in each of the pool accounts.
Farmers may, alternatively, choose the CWB's Early Payment Option (EPO) as a payment method. The EPO, as with the other CWB Producer Payment Options, can be used as a cash-flow tool. It provides similar returns to the CWB pool accounts, less a discount. The EPO allows farmers to receive an additional payment, on top of the initial, within 10 business days of delivery. EPOs are available at values equal to 80, 90 and 100 per cent of the PRO.
Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada's biggest exporters, the Winnipeg-based organization sells grain to more than 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.
For more information, please contact:
Maureen Fitzhenry
CWB Communications Consultant
tel: (204) 984-7747
cell: (204) 479-2451
Market outlook for the 2005-06 crop year
Wheat
The initial payments for wheat are lower than last year's because of factors related to world and domestic wheat supply, production and demand projections and foreign-exchange rates. Global carry-in stocks and projected production levels for 2005 are
expected to generate a more-than-ample supply situation relative to world demand. The United States Department of Agriculture (USDA) expects global wheat production to reach the second-highest level on record (613 million tonnes, versus 625 million
tonnes in 2004-05). Although wheat production in the five major exporting countries is expected to decline overall, due largely to lower production in the European Union, production in the Ukraine, Kazakhstan and Russia is set to increase,
maintaining plentiful supplies of mid- to low-grade wheat for export. The Canadian dollar is expected to remain strong relative to the U.S. dollar during 2005-06 - considerably higher than this time last year - a significantly negative factor for all
four pool accounts.
Durum wheat
The initial payment for durum is slightly lower than last year. Significantly lower durum production in North Africa and the European Union, combined with minimal global carry-in supplies of high-grade, high-protein durum are positive factors for
prices in 2005-06. After harvesting back-to-back bumper durum crops in 2003-04 and 2004-05, durum production in Morocco, Algeria, and Spain has been impacted significantly by prolonged dryness. However, anticipation of an ample North American crop,
above-average global durum carry-in stock levels and a strong Canadian dollar outlook are factors keeping the price outlook for durum in check.
Feed barley
The initial payment for the 2005-06 feed barley A Pool is similar to the 2004-05 Pool B initial payment. Global barley production is projected by USDA to decline by more than 10 per cent to 135 million tonnes, while yield potential in parts of the
U.S. "corn belt" has had an adverse impact on corn production prospects. Lower ocean freight rates are also a positive factor in making Canadian feed barley more competitive in the export market. However, global barley stocks remain historically
high, with sizeable exportable surpluses expected in the EU-25, Russia and Ukraine.
Designated barley
The initial payment for designated barley has decreased $4 to $5 compared to 2004-05. Although global malting barley demand is projected to be steady to slightly stronger in the upcoming year, western Canadian and Australian malting barley
availability is expected to increase due to improved growing and harvest conditions. The European Union is also expected to produce a sizeable malting barley surplus, which will keep prices under pressure. The strong Canadian dollar is also a factor
that will have a negative impact on farmers' returns. A larger designated barley pool is expected, assuming normal growing conditions and favourable harvest weather.