November 10, 2005

Canadian feed wheat supported by potential duty on US corn
 

Uncertainty in the Canadian feed grains sector regarding a potential duty on US corn has helped lend some support to the feed wheat cash market, according to sources. But with large supplies still sitting in the country, activity has been subdued.

Feed wheat pricing can currently be found in the low to mid C$70s a tonne in Alberta and Saskatchewan, while prices are slightly higher in Manitoba, reaching the C$80s a tonne, according to sources.

A Manitoba-based feed grains broker said feed wheat was moving to Thunder Bay for C$117-118/tonne, destined for locations further east.

"There's been some good demand from out there due to concerns for a potential duty on US corn," he said.

The Canada Border Services Agency is currently looking into allegations that US corn is being "dumped" into Canada. Tariffs on US corn could be in place as early as December.

"Everyone is awaiting the news on the corn duty in December," said the broker. He thought just the potential for a tariff was friendly for feed wheat values. While the uncertainty has caused some end-users to back away from the market if their nearby needs are covered, he expected the feed markets to hold firm as long as the potential for a tariff remains.

With the harvest now finished across western Canada, and most of the old stocks cleaned out of the commercial pipeline, farmer holdings are getting a little tighter, said the broker. He added that there was no shortage of feed wheat in western Canada.

Farmers are blending as much feed wheat as they can, which will keep some out of the market, said the broker. He thought Saskatchewan growers would have the best opportunities to blend, as their wheat did not end up as low-grade as originally expected. "There is still a fairly big feed wheat crop in Alberta and Manitoba," said the broker.

In other feed wheat news, the Canadian Wheat Board is now offering a Guaranteed Delivery Contract for feed wheat for the first time.

While the cash market is still generally preferable, an analyst thought the CWB might be an attractive option for producers in those areas where the feed demand is not as high. He added that the CWB likely had a sale on for nearby shipment, necessitating their need to guarantee some supplies.