Growers frustrated by low prices offered for winter wheat

Winter wheat growers are frustrated.

The 2017 crop in Western Canada had low disease and high quality, but some producers feel grain elevators are low balling the price.

That’s because buyers are using it to blend into spring wheat or for feed, said Jake Davidson, executive director of Winter Cereals Canada.

“The problem right now is the easiest way to handle this crop is to not try to sell it for what it is,” said Davidson.

“It’s winter wheat. Market it as winter wheat…. You can take this crop and sell it, at a good price, into countries like China and Japan.”

Paul Thoroughgood, an agronomist with Ducks Unlimited Canada in Saskatchewan, received about 20 phone calls in August and September from winter wheat growers. Those producers were frustrated by offers at their local elevator.

Thoroughgood, who farms near Regina, also struggled to sell his winter wheat this year. The best offers were in the low $4 per bushel range for milling quality wheat.

“The quality of the winter wheat crop we took off was tremendous and to see the milling market that heavily discounted — it’s discouraging,” he said to Commodity News Service Canada.

Growers believe that bids for winter wheat at U.S. elevators are higher than Western Canada with premiums of as much as $1 per bu.

For instance, in September the cash price for 11.5 percent protein winter wheat at a United Grain elevator in Culbertson, Montana, was US$4.06 per bu., or C$5.10.

Davidson said blending Canadian winter wheat with spring wheat isn’t acceptable.

“The grain companies should be selling Canadian winter wheat to buyers in (Asia) where it could be used to make noodles or steam buns. They’re not taking advantage of the ability to market this to the world, as a significant product,” he said.

“They are ignoring all the hard work that went into these new varieties to make them exceptionally milling quality.”

Using winter wheat as a blending wheat is a recent phenomenon, he added. Not long ago Canadian winter wheat was promoted and sold as a unique commodity.

“(It was) never designed as a blending wheat,” he said.

“Under the (Canadian) Wheat Board you (a foreign buyer) ordered winter wheat, you got winter wheat. You ordered spring wheat, you got spring wheat.”

There may be winter wheat demand in Asia, but it’s not easy for Canadian grain companies to jump into that market, said Wade Sobkovich, Western Grain Elevator Association executive director.

For starters, Canada’s winter wheat crop is relatively small.

“Asian buyers are not interested in one or two cargoes per year from a supplier. They want twelve months of supply of consistent quality, year over year,” he said.

“Canada doesn’t produce enough winter wheat to allow Beijing to make steam buns for a week, let alone Asia for a year.”

As well, the lower bids for winter wheat are a message to growers.

Sobkovich said the world is “awash” in low protein winter wheat, and Canadian grain companies must respond to that reality.

“The market is telling grain handlers that blending and domestic feed are the best options for winter wheat,” he said.

“In turn, price signals are sent to grain producers so they can make good decisions about what to plant. Today, the market is sending the signal to not grow winter wheat…. At $2 per bushel futures differential between red spring and winter wheat, winter wheat acres will continue to drop in Canada, thus making it even more difficult to put a bulk export program together.”

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