Grain prices should be good this year, wheat board specialist says

Weather poses the biggest risk to farm incomes this year, according to the Canadian Wheat Board's weather specialist.
"You can grow pretty well any crop you want this year and get a decent return," said Bruce Burnett, wheat board director of market analysis.
"The only threat is weather."
Low global stocks of grain, an event that normally pushes up grain prices, have existed for years with no impact on price levels, he told a wheat board market outlook seminar in Moose Jaw Thursday.
"Everybody was asleep at the switch. We've eaten ourselves out of the global food surpluses we had," said Burnett.
"Suddenly, there's a demand for grain."
Lower year end stocks of cereal grain are expected across the wheat, durum and barley spectrum in 2008, he said.
An estimated 3.9 million tonne increase in world wheat production will easily be absorbed by consumption as the globe enters a third year of less production than use, he said
Low global grain stocks, combined with weather events, will create volatile price swings up and down in the coming months.
Right now, poor moisture and low rainfall in the Kansas/Oklahoma winter wheat growing region are on the market radar, as Minneapolis wheat prices exploded to $25 a bushel. The price was $12 last fall.
"Those crops are just emerging. They need moisture to grow."
Soil moisture in that region is low.
Watch for events changing soil moisture in northern India crops and for the potential of a second consecutive year of drought in Australia, Burnett said.
Crop failures, or a threat of failure in any wheat growing region from Russia and the Ukraine to Canada and the U.S., or successes, will drive prices up or down.
"(Speculation by large hedge funds have affected some wheat markets) but the fundamentals are behind these prices. I'd say 85 per cent of the move is fundamental."
Corn is driving prices of all grains higher. "(Commodity) buyers need to get enough acres for a supply and they bid prices up."
Ethanol use of corn in the U.S. will require 10 million bushels more this year to use 87 million bushels of an estimated 277 million bushel crop.
The U.S. will have to curb corn exports if it wants to maintain year end stocks, he said.

Ron Walter can be reached at 691-1264.