Bad weather — preferably elsewhere — is Prairie farmers’ best bet for a wheat market rally this year, the Canadian Wheat Board’s director of weather and crop surveillance unit told farmers attending Manitoba Ag Days Wednesday.

 

“We’re going to need a weather event in one of those big six (exporting) countries to turn the wheat market from trading neutral and maybe dipping to increasing prices again,” Bruce Burnett said.

 

Burnett said India is already suffering the effects of a failed monsoon and eyes will soon turn to Australia, which is vulnerable to the effects of the ongoing El Nino effect. 

 

While demand has remained relatively strong for wheat in the world, despite the global recession, two record crops in a row have created surplus supplies.

 

Projected global wheat production is 644 million tonnes this year, largely due to declining acreage in key growing areas. That is lower than the 676 million tonnes the world produced in 2009 and 682 million tonnes produced in 2008.

 

However, it is still enough to meet the projected demand.

 

Burnett said the relative strength of the Canadian dollar against U.S. currency will further cut into farmgate returns.

 

Meanwhile, the price of oil has bounced back to the $80 per barrel range, and he suspects that market will continue to be strong, which increases the value of agricultural commodities and the attractiveness of biofuels produced from grains.

 

Burnett was also cautiously optimistic that U.S. corn prices, which factor into Canadian barley values, will find support from the growing U.S. ethanol sector despite recent USDA data that pegged last year’s crop a record. 

 

Ethanol is expected to overtake livestock as the largest single domestic user of corn in the U.S. within two years. “Despite prices getting hammered this past week, the fundamentals for corn are really quite neutral,” Burnett said.

 

However, he cautioned the outlook isn’t bright for barley, given the current state of Canada’s livestock sector. “Without a vibrant livestock sector, it’s going to be hard to get prices up,” he said. 

 

The pulse outlook is the most encouraging, with strong demand and good prices. The oilseed outlook is neutral, with good demand but large supplies. 

 

The durum outlook is negative, with burdensome supplies weighing on prices.