Newsroom
2003
CWB announces 2003-04 initial payments by grade
August 1, 2003
Winnipeg - The Canadian Wheat Board (CWB) today announced the 2003-04 initial payments for the various grades of wheat and barley. The payments are effective immediately for deliveries into the 2003-04 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 (under the payments link) at www.cwb.ca.
| Initial Payment | |||
| Grade | 2003-04 | 2002-03 | |
| Wheat | |||
| No. 1 Canada Western Red Spring 12.5 | $130.00 | $149.00 | |
| Durum | |||
| No. 1 Canada Western Amber Durum 12.5 | $130.00 | $175.00 | |
| Feed Barley | |||
| No. 1 Canada Western | $80.00 | $105.00 | |
| Designated Barley | |||
| Special Select Canada Western Two-Row | $142.00 | $147.00 | |
| Special Select Canada Western Six-Row | $128.00 | $132.00 | |
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, they will vary from year to year according to changing market conditions. During the crop year, the CWB reviews the initial payments on a regular basis 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.
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 company sells grain to more than 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.
Market outlook for the 2003-04 crop year
Wheat
World wheat prices in 2003-04 are expected to be lower than in 2002-03 as production in Canada, Australia, the U.S. and Argentina, four of the world’s five traditional major exporters, recovers to more normal levels. Conversely, the minor
exporters, who captured about 40 per cent of global wheat trade in 2002-03, are not expected to play a significant role in third-country markets in 2003-04. According to the U.S. Department of Agriculture (USDA), world wheat trade is forecast at 97.6
million tonnes in the upcoming year, down from an estimated 105.3 million tonnes in 2002-03. Bumper crops in North Africa are expected to reduce import demand in this region while decent crops in the Middle East, particularly Iran, should keep import
demand in this region at a relatively low level for another year. European Union (EU) wheat imports are projected to fall sharply from 2002-03 due to the EU’s new import regime and reduced supply from Eastern Europe and the former Soviet
Union (FSU). The EU is expected to have a smaller crop, combined with less aggressive export subsidies in 2003-04 than in this past year. Much stronger import demand in some countries of the former Soviet Union (FSU) and Eastern Europe should
partially offset the lower imports in other regions. Relatively more abundant supplies of high and medium-quality milling wheat and much tighter supplies of lower quality milling/feed wheat should reduce the high-low quality premium. However, protein
premiums are expected to increase somewhat due to the lower protein Hard Red Winter wheat crop in the U.S. The continued strength of the Canadian dollar is also expected to reduce the Canadian dollar returns realized by western Canadian farmers in
2003-04.
Durum wheat
Larger durum production in most exporting countries and weaker global durum import demand are expected to put downward pressure on global durum prices in 2003-04. A poor finish to the EU durum crop, particularly in Italy, France and Spain, should
provide some support to global prices through increased import demand and reduced exports. However, a larger crop in North America will likely mean larger supplies competing for weaker demand due to the large North African harvest. Competition from
other exporters like Syria, Turkey and Australia is also expected to be significant. With dryness becoming a concern in parts of Western Canada and extremely tight high-quality durum wheat carry in stocks, growing conditions and harvest weather in
North America will be critical.
Feed barley
Offshore feed barley values are currently strong, but are expected to soften over the course of the coming year. According to the USDA, global barley production is currently projected at 138.9 million tonnes, up 6.5 million tonnes from the previous
year, primarily driven by increases in Canada and Australia. Less than favorable growing conditions across the EU have reduced production prospects there. However, good crops in North Africa and the Middle East are expected to weigh on import demand
prospects in the coming year. In contrast, reduced export availability, particularly in Russia and Ukraine, should provide some support for prices. Conversely, abundant exportable supplies of U.S. corn in 2003-04 may negatively affect global feed
barley values. Domestic feed barley prices are projected to come under considerable pressure with the upcoming barley crop in Western Canada expected to almost double in size, but domestic values will ultimately depend on factors such as when
Canada-U.S. beef trade resumes and weather conditions through the remainder of the growing season and the harvest period.
Designated barley
In spite of stronger global import demand and extremely tight carry in supplies, global malting barley prices are forecast to be lower in 2003-04 due to expectations for much larger barley crops in Canada, the U.S. and Australia. While poor crops in
Europe and the FSU should provide some price support, growing conditions and harvest weather particularly in Canada and Australia will be the key factors in the price outlook over the next several months. Stronger global trade is forecast for 2003-04
led by improved demand in China, the U.S., Eastern Europe and the FSU. However, excess malt capacity relative to global demand is expected to keep pressure on malt values in the coming year.
For more information, please contact:
Rhéal Cenerini
Communications consultant
Winnipeg, MB
tel: (204) 983-4497