June 22, 2006

 

Iraq not expected to purchase Canadian wheat until 2006/07

 

 

Iraq is currently in the process of picking up the last of the wheat it purchased from Canada earlier this year from the West Coast port of Vancouver, but it may be well into the 2006/07 (Aug/July) crop year before that country returns for additional purchases, according to industry participants.

 

There had been much fanfare when Iraq announced in February that it purchased 500,000 tonnes of Canadian wheat for delivery in the 2005/06 crop year. The wheat sale consisted of no. 2 CWRS wheat with a protein content level of 12 percent. Iraq was once Canada's third largest wheat customer, and there were hopes that the country would again make a move in that direction.

 

The market had hoped that, with Iraq again interested in buying Canadian canola, additional sales would have been made ahead of the 2006/07 season, Glenn Lennox, the wheat analyst with the Market Analysis Division of Agriculture and Agri-Food Canada said.

 

"However, it does not appear that Iraq will make any further purchases of Canadian wheat until well into 2006/07 at this stage," he said.

 

An export source said the wheat sale to Iraq in 2005/06 did not mean much, as it only represented 500,000 tonnes out of a potential 15 million to 18 million tonne Canadian wheat export programme.

 

The export source also said that for Canada to once again become a regular supplier of wheat to Iraq, the country will need to regain its independence. "The likelihood of the US relinquishing control of Iraq in the near term is still pretty slim at best."

 

With Iraq under US control, expectations are that most of the wheat brought into that country will be of US origin, with maybe some from the UK and Australia. "The countries that did not originally support the US will find themselves, like Canada, on the outside looking in until that country's independence is reclaimed," the exporter said.

 

However, the exporter cautioned that once an Iraqi regime has regained independence, Canada may be able to make some significant inroads.

 

Lennox also said he felt Iraq will want to diversify the locations in which it purchases wheat as soon as they can. However, he said he was unable to speculate on whether the purchases would be significant or not.

 

"They are aware of the repercussions of having all their eggs coming from one supplier," Lennox said.

 

The last time Canada sold wheat to Iraq was during the 1999/2000 (Aug/July) and 2000/01 crop years, according to figures from the Canada Grains Council. In 1999/2000, Canada sold 262,000 tonnes of Canada Western Red Spring (CWRS) wheat, and in 2000/01 Canada sold 310,000 tonnes of CWRS wheat to Iraq, the figures showed.