Ontario Wheat Producers' Marketing Board

Ontario Wheat Market Commentary for July 31, 2009
By Seamus Hoban, Ontario Wheat Producers’ Marketing Board

WHEAT – September wheat at the Chicago Board of Trade settled at 5.16 ¼ US on Thursday July 30, 2009, up 4 ¾ cents for the day, but down 15 ½ cents for the week. September Kansas City wheat settled at 5.61 ¼ US, up 6 ¾ cents for the day and up 2 cents for the week. September Minneapolis wheat settled at $6.00 US, up 1 ¾ cents for the day and unchanged for the week. September corn settled at $3.32 ¼ US at the CBOT, up 5 ¼ cents for the week, and November soybeans closed at $9.71, up 39 cents for the week. The September Canadian dollar is buying $0.9231 US dollars up 0.16 cents for the week.

A flurry of demand for corn and soybeans produced significant late week rallies for those commodities, however disappointingly wheat prices were not spurred forward to the same degree.

Early season demand for US wheat is down 47% and the USDA is predicting that annual demand will be down 11%. The US recorded weekly export sales of 575,000 tons, which was a significant increase from the previous week but in line with estimates.

The Ontario winter wheat harvest is now very late due to the ongoing wet weather. Wheat quality has been good to date, however the prospect of continued rain threatens to cause downgrades due to blackpoint, fusarium and sprouting. The major threat to unharvested soft white wheat is sprouting, while fusarium is the major risk to unharvested soft red wheat. If you are unsure of the quality of your wheat, one option is to have a sample tested before you ship to an elevator or terminal.

Fusarium also threatens to affect Spring wheat particularly in Eastern Ontario which has received considerable rainfall throughout July.

Regulatory changes have opened up the Port of Oshawa for grain transport, unlocking significant transport savings for the industry. From Oshawa grain will now be able to be transported across the lake to Buffalo, accessing other U.S. markets or exported through the St. Lawrence Seaway. Grain transport is expected to begin in August.

Grain and agrifood firm Parrish and Heimbecker plans to build a new flour milling unit in Acton, near Guelph, to replace the Toronto area mill lost to fire last year. Together with an existing mill the company operates in the area, Parrish and Heimbecker expects to have a total capacity of approximately 363 tonnes per day.

Contract prices for July 30, 2009 at the close are as follows:
SWW at $181.01 per tonne ($4.93/bu.), SRW at $181.01 per tonne ($4.93/bu.), HRW at $194.93 per tonne (5.31$/bu.), and HRS at $218.99 per tonne ($5.96/bu.).

Ontario Wheat Market Commentary for July 3, 2009
By Todd Austin, Ontario Wheat Producers’ Marketing Board

WHEAT – September wheat at the Chicago Board of Trade settled at $5.29 US on Thursday July 2, 2009, down 6 ½ cents for the day, and down 32 ½ cents for the week. September Kansas City wheat settled at $5.64 ¼ US, down 9 ¼ cents for the day and down 38 ¼ cents for the week. September Minneapolis wheat settled at $6.22 ½ US, down 11cents for the day and down 50 ½ cents for the week. September corn settled at $3.45 ¾ US at the CBOT, down 27 cents for the week, and August soybeans closed at $11.54 US, up 27 cents for the week. The September Canadian dollar settled at $0.8636 US down $0.0006 for the week.

Most grain market analysts thought they had correctly anticipated the USDA June 30^th Acreage report: corn planted acres would be down and soybean acres would be up. In the Acreage report soybean acres were up; however U.S. farmers, despite rain delays and muddy fields, planted 87.04 million acres of corn, three million acres more than the average trade guess and two million more acres than farmers estimated they would plant back in March. Markets responded by falling limit down on this unexpected corn acreage report.

Wheat prices fell, more in Minneapolis and Chicago than Kansas City, partly due to a reported 13.77 million acres of spring wheat planted, 675,000 more than expected by wheat traders. However, spring wheat crop development is well behind average. The June 28^th Crop Progress Report showed only 15 percent headed out compared to the five-year average of 40 percent. The U.S. total wheat crop of 59.8 million acres is down five percent from last year. These estimates add additional resistance to a market that is already falling under the weight of adequate domestic and global supplies, harvest selling and weak global demand. Additionally, wheat is not likely to gain much support from corn as that market will have to fight the resistance of an 87million acre crop.

The other factor affecting wheat price is the rapid progress of the Kansas harvest. Kansas wheat producers cut about 3.5 million acres of wheat during the week ending June 28^th and were nearing the half-way point, though it is still too early to judge the size of the Kansas crop.

Weekly U.S. wheat export sales of 241,900 tons for the week ended June 25 were toward the low end of analysts' estimates, which ranged from 200,000 tons to 400,000 tons. Export sales were down 34% from the previous week, according to the U.S. Department of Agriculture. Export demand has been lackluster lately, the supply storyline for wheat is seen as bearish; U.S. and world supplies are considered adequate.

Contract prices for July 2, 2009 at the close are as follows:
SWW at $163.91 per tonne ($4.46 /bu.), SRW at $163.91 per tonne ($4.46 /bu.), HRW at $170.31 per tonne ($4.64/bu.), and HRS at $227.30 per tonne ($6.19 /bu.).

Ontario Wheat Market Commentary for June 26, 2009
By Rod Crinklaw, Ontario Wheat Producers’ Marketing Board

WHEAT – September wheat at the Chicago Board of Trade settled at $5.61 ½ US on Thursday June 25, 2009, down 6 ¼ cents for the day, and down 28 cents for the week. September Kansas City wheat settled at $6.02 ½ US, down 5 ¼ cents for the day and down 27 cents for the week. September Minneapolis wheat settled at $6.73 US, down 13 ¾ cents for the day and down 29 ¾ cents for the week. September corn settled at $3.90 US at the CBOT, down 21 ¾ cents for the week, and August soybeans closed at $11.27 US, down 23 ¼ cents for the week. The September Canadian dollar settled at $0.8642 US down $0.0188 for the week.

US winter wheat conditions are rated 45% good to excellent this week, up 1% from last week. Spring wheat conditions are rated 77% good to excellent this week, up 2% from last week.

The International Grains Council is forecasting 2009-10 world wheat production at 652 million tonnes, unchanged from last month and 35 million below the 2008 record. World wheat stocks are forecast to increase by 8 million tonnes in 2009-10 to 168 million, 1 million more than last month.

The Commodity Futures Trading Commission will consider recommendations made this week by Senator Carl Levin regarding excessive speculation in U.S. wheat futures. A lack of convergence between wheat futures and cash prices has made it challenging for farmers and end-users that use futures as a hedge against rising or falling prices. The report suggests lenient regulation has contributed to the lack of convergence and limiting speculation would be beneficial.

The Buenos Aires Grains Exchange continues to cut it’s 2009/10 Argentine wheat plantings estimate. The Exchange has dropped its estimate to 2.9 million hectares this week, down from 2.96 million hectares last week, and the smallest wheat area since Argentine records began. They expect more cuts if the drought does not lift soon.

The OWPMB landed basis initial pool payments for the 2009 crop year have been announced and are as follows:
Pool A-SWW- $123.00/MT
Pool B- HRW- $129.00/MT
Pool C-HRS- $173.00/MT
Pool E- SRW- $117.00/MT
Pool F- HR- $117.00/MT
Pool G- Feed- $103.00/MT
To participate in the pool program wheat must be delivered to an OWPMB agent or terminal by September 30, 2009.

Contract prices for June 25, 2009 at the close are as follows:
SWW at $176.84 per tonne ($4.81 /bu.), SRW at $176.84 per tonne ($4.81 /bu.), HRW at $183.20 per tonne ($4.99/bu.), and HRS at $247.53 per tonne ($6.74 /bu.).

Ontario Wheat Market Commentary for May 15, 2009
By Rod Crinklaw, Ontario Wheat Producers’ Marketing Board

WHEAT – July wheat at the Chicago Board of Trade settled at $5.93 ¼ US on Thursday May 14, 2009, up 4 ½ cents for the day, and up 23 cents for the week. July Kansas City wheat settled at $6.43 ¾ US, up 5 ¾ cents for the day and up 30 cents for the week. July Minneapolis wheat settled at $7.25 ¾ US, up 12 ½ cents for the day and up 39 ¼ cents for the week. July corn settled at $4.28 ¼ US at the CBOT, up 16 ¼ cents for the week, and July soybeans closed at $11.47 ½ US, up 45 ½ cents for the week. The June Canadian dollar settled at $0.8550 US up $0.0031 for the week.

The USDA released their World Agricultural Supply and Demand Estimates on May 12. US all wheat production for 2009/10 is estimated at 2.026 billion bushels, down 19% from last year on reduced area and lower expected yields. Winter wheat production is estimated at 1.502 billion bushels of which 871 million is HRW, 422 million is SRW and 208 million is white wheat. US wheat supplies are projected down 4% despite high carry-in levels.

Global wheat production is projected at 657.6 million tonnes, down 4% from last year’s record, but would still be the second largest crop ever if realized. Global wheat stocks are projected at 181.9 million tonnes, up 9% from 2008/09 and the highest in 8 years. Reduced output from the major exporting countries will be partially offset by better production prospects in North Africa and the Middle East. The results of this report agree with what most analysts were expecting which is lower production than last year, but still enough wheat to meet all use requirements and to increase ending stocks.

Egypt ordered the seizure of Russian wheat this week because of allegations that a quantity of spoiled wheat unfit for human consumption had entered the country without proper quality control approvals. Egypt has imported 3 million tonnes of Russian wheat since last June up until the end of February compared with 1.5 million tonnes of U.S. wheat purchased in the same period, according to the U.S. Department of Agriculture.
The OWPMB is revising its crop production estimate from April 15 2009. Many fields effected by winter conditions and a cool wet spring have not recovered as well as everyone had hoped. OMAFRA is reporting up to 12% winterkill and the possibility of reduced yields in the remaining crop. Production for winter wheat is now estimated at 850,000 acres down 100,000 acres for a total crop size of 1.7 million tonnes. This is a reduction of 200,000 tonnes from the April estimate. Classes are split 82% SRW, 11% HRW and 7% SWW. The SRW crop off shore export expectations are reduced from 800,000 tonnes to fewer than 700,000. If the corn/wheat spread continues, some of this wheat may go into the feed market. The HRW and SWW crop will be used in the Ontario and nearby U.S. markets. Due to a continuing decline in acres these crops are at the point where very little will find its way into offshore markets.

Contract prices for May 14, 2009 at the close are as follows:
SWW at $176.20 per tonne ($4.80 /bu.), SRW at $190.37 per tonne ($5.18 /bu.), HRW at $196.82 per tonne ($5.36/bu.), and HRS at $266.18 per tonne ($7.24 /bu.).