| The Canadian Wheat Board sending out their latest Pool Return Outlook. It's not all good news. We have the official CWB release. |
| The CWB today released its May Pool Return Outlook (PRO) for the 2007-08 crop year. Wheat PROs were reduced by $7 per tonne compared to April, while durum PROs declined $7 to $11 per tonne. The dramatic strengthening of the Canadian dollar, which reached a 30-year high against the U.S. dollar this week, is the predominant reason for the decline in pool return outlooks. |
| PRO Commentary |
| 2007-08 crop year |
| The effect of a strengthening Canadian dollar |
| As most of the world's grain is traded in U.S. dollars, returns decrease as the Canadian dollar strengthens versus the U.S. dollar. While not unprecedented, the rate of the strengthening of the Canadian dollar is very unusual. The performance of the Canadian economy has consistently surpassed expectations over the past few months. Retail spending is strong, the business sector is healthy and global demand for raw materials is strong. Weakness in the U.S. dollar against the Canadian dollar and other currencies has been driven by the cooling U.S. economy and the softening U.S. housing market. The rebound in commodity prices for oil and metals since January 2007 has also caused the Canadian dollar to strengthen. |
| Wheat |
| The stronger Canadian dollar has reduced projected returns for wheat. Market factors the CWB is watching at this time include the following: U.S. grain futures markets have traded lower since April, given reduced concerns over U.S. corn planting delays and improvements in U.S. winter wheat crop prospects. Australia has also received timely rains, which is expected to support a big rebound in wheat production compared to last year. Spring wheat planting delays in western Canada due to wet weather are a concern. |
| Durum |
| A significantly stronger Canadian dollar, coupled with a sharp increase in ocean freight rates into key durum markets, has reduced the price outlook for durum this month. |
