January 2, 2009

 

Canada's wheat exports catching up to last year's pace

The Canadian Wheat Board's wheat export programme was slow to get going in 2008/09 but has nearly caught up to last year's pace heading into the second stretch of the marketing year.

 

According to the Canadian Grain Commission's grain handling summary for the 21st week of the marketing year, which ended December 21, Canadian non-durum wheat exports totalled 5.057 million tonnes, compared to 5.368 million tonnes for the same period last year.

 

That compares to week 11 in mid-October when 2008/09 non-durum wheat exports totalled 2.638 million tonnes, nearly 500,000 tonnes behind the previous year's wheat export pace of 2.867 million tonnes.

 

Bruce Burnett, director of weather and market analysis for the Canadian Wheat Board, or CWB, said people who noticed and questioned the initial lag should keep a number of factors in mind.

 

"Our transportation system is finite and there are a lot of products other than wheat, durum, and barley that get hauled on it and that sometimes may take priority. So there are transportation limits," Burnett explained.

 

Another key point to bear in mind is the slow harvest pace this year, Burnett said.

 

Export pace declined in the first quarter of the year due to a later crop and low stock levels going into this year, said Burnett.

 

Depressed prices and the slow 2008/09 export pace were encouraging ideas that the CWB was hesitant to make wheat sales at lower values in order to avoid diluting the pooled returns for prairie farmers.

 

Burnett, however, was quick to counter suggestions that the CWB was "slacking off" due to lower demand and prices and their subsequent impact on collective farmer payments.

 

"The Board is attempting to market selectively when they can, especially in certain areas and when there is extreme price pressure because you're always seeking the better alternative," Burnett said.

 

Finding good marketing opportunities for the remainder of the year will continue to be a struggle, however, as already large global wheat supplies will become even bigger when countries in the southern hemisphere begin to market their crops in the coming months.

 

The November supply/demand table from the International Grains Council forecasts global all wheat production for 2008/09 at 683 million tonnes while world consumption was pegged at 650 million tonnes.

 

That said, quality downgrading in some crops, particularly the Australian crop, could reduce supplies of high quality wheat, which in turn would reduce competition for Canada in certain wheat markets.