March 1, 2012

 

CHS buys Canadian durum wheat, more crops

 

 

US grain co-operative, CHS Inc., is purchasing Canadian durum and seeks to buy more of other crops there to seize the opportunity left by the end of the Canadian Wheat Board (CWB) marketing monopoly later this year, a CHS executive said Monday (Feb 27).

 

In mid-December, a federal bill became law that will end on August 1 the CWB's monopoly to market Prairie wheat and barley for milling or export. Canadian grain handlers such as Viterra, Cargill and Richardson International quickly began signing contracts with farmers to buy grain for delivery after the monopoly ends.

 

St. Paul, Minnesota-based CHS has so far bought a modest 65,000 to 70,000 tonnes of 2012 durum wheat from Prairie grain handlers, who will eventually move it to CHS elevators in the US, Tom DeSmet, vice president of marketing for CHS, said in an interview. CHS resells the grain to end users, such as grain millers.

 

Canada is the biggest exporter of spring wheat, durum, rapeseed and oats. The Wheat Board's monopoly has been in place for 69 years.

 

"This is phenomenal. (Ending the monopoly) is huge to the world," DeSmet said on the sidelines of the Wild Oats Grainworld conference in Winnipeg. "The durum world, the grain world, has got their eyes on Canada big-time."

 

Grain buyers, such as millers, are worried about ensuring they can maintain supplies after the board loses its monopoly and are giving CHS flexibility in filling orders, he said.

 

"The people we work with are giving us options. 'I'll take Canadian (grain) at this price, US at this price, you supply it.' And I think the reason they're doing it is they're very concerned and want to give us the flexibility to make sure they get the product."

 

CHS is buying from virtually all Canadian grain handlers, DeSmet said. In past years, CHS bought grain from the CWB, to which western farmers were required to sell wheat.

 

CHS opened its first Canadian grain office late last year.

 

Durum will be a major focus of CHS in buying Canadian crops, DeSmet said, but it will look at other crops as well. CHS also handles spring wheat, rapeseed and flax - among other crops - which Prairie farmers grow.

 

Farmers have been reluctant sellers of 2012 crops so far, he said, as prices slide and in two months seeding is expected to begin.

 

CHS does not intend to buy directly from Canadian farmers and has no plans to buy or build country elevators in Western Canada, DeSmet said.

 

Canada is poised to boost its acreage of most major crops this spring, including spring wheat, durum and rapeseed, as dry conditions give farmers greater planting opportunity after several flood years left many fields fallow.