June 7, 2012

 

Canada's 2011-12 wheat exports up again

 

 

Bigger and better 2011-12 supplies from a year earlier and near ideal weather for moving grains by rail from the Prairies to ports have made Canada's wheat exports to bounce back strongly.

 

A larger crop last autumn, with typical quantities of top-quality grades after a subpar previous harvest, stoked the appetite of Canada's biggest export buyers of spring wheat, used mainly for baking.

 

Mills in top buyer Mexico bought more than twice as much Canadian wheat -over 900,000 tonnes -from August through April, while the US and Japan imported 41% and 31% bigger volumes respectively, Canadian Grain Commission data shows.

 

"What you're seeing is the impact from that poor-quality (2010-11) harvest into a better-quality harvest for both spring wheat and durum," said Bruce Burnett, director of weather and market analysis at the Canadian Wheat Board which owns a marketing monopoly for western wheat and barley from the 2011-12 year, which ends July 31.

 

Canada is the top exporter of spring wheat and durum. In a year of poor quality, like 2010-11, more of Canada's wheat tends to be used domestically as livestock feed, Burnett said.

 

From August through May 27 of the 2011-12 crop marketing year (August/July), Canada exported about 11.7 million tonnes of wheat excluding durum (a category that mainly reflects spring wheat), up 18% over year.

 

During the same period, Canada exported 3.2 million tonnes of durum wheat, used for making pasta, up 17%. While exports are up sharply over year, based on longer-term averages they should finish the 2011-12 year around normal levels, Burnett said.

 

Along with Canada's usual big wheat customers, exports grew sharply to Colombia, after a free-trade deal took effect last August, and to Iran, which has scrambled to secure food amid economic sanctions that have complicated financial transactions.

 

Colombia bought 668,000 tonnes of Canadian wheat from August through April, more than twice their purchase volumes a year earlier, while Iran imported 166,000 tonnes from zero reported a year ago.

 

Black Sea region wheat growers returned to a major role in the global wheat trade in 2011-12 after severe drought the previous year, but those countries produce mostly lower-quality wheat that don't compete directly with Canada, Burnett said.

 

The weather during winter and spring was also much better for moving Canadian commodities by rail, a wheat exporter said, after the previous year of avalanches and spring floods hampered rail movement.

 

"This is probably one of the best shipping years we've ever had in terms of weather delays," said the exporter, who did not have permission to speak publicly and spoke on condition of anonymity. Rail is the main way grains from Western Canada move to port, with no river freight system.

 

Canada's No. two railroad Canadian Pacific Railway Ltd, resumed freight service on Friday after Ottawa ordered striking workers back to their jobs following a more than week-long strike.

 

The brisk export pace counters suspicions in the grain trade that the Wheat Board might hold over some 2011-12 supplies past August 1, when it will no longer hold a marketing monopoly.

 

Western Canadian farmers are now planting what's expected to be a bigger area of wheat for the 2012-13 year, after two straight years of spring flooding. Spring wheat supplies from the US also look to be larger, with farmers in the northern Plains nearly finished planting well ahead of schedule and 79% of the crop in good to excellent condition as of Sunday.

 

Lower-protein Canadian spring wheat also competes with US winter wheat, which has suffered from hot, dry weather that caused its condition to deteriorate last week, according to the USDA.