WINNIPEG (Reuters) — Canada’s biggest wheat crop in more than two decades will send supplies into unusual places, grain traders say, battling head on with U.S. wheat.
Early harvest results show production might top Statistics Canada’s August prediction of a 30.6 million tonne wheat and durum crop.
Nearly two-thirds of the crop is destined for export, according to Agriculture Canada.
Such ample supplies and expectations of lower-than-usual protein levels have created attractive prices for buyers, said Rhyl Doyle, director of export cereals for Paterson Grain.
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“These kind of prices and protein profile will give us the tools to put it into a lot of places,” he said.
“If the price is right, that’s the key, and our farmers are sellers.”
Canada is the world’s second-biggest producer of spring wheat and the No. 2 producer of durum.
Canada Western Red Spring wheat with 12 percent protein was available last week at British Columbia ports for $283 per tonne, which is 10 percent or $30 per tonne cheaper than U.S. hard red winter wheat with the same protein at the Gulf of Mexico, Doyle said.
“The Canadian prices will push Canadian wheat into a lot of hard red winter markets, even where you have a substantial freight disadvantage (from Canada),” Doyle said.
Mid-range protein wheat from Canada and the United States will vie for sales, particularly in Latin America and Africa, he said. This year, Canada looks to have smaller-than-usual supplies of high protein wheat (higher than 13 percent), which usually moves into Western Europe and Asia, but there should be enough 13 percent protein wheat for Japan to make bread and noodles, Doyle said.
Canadian wheat was also competing in traditional U.S. territory last year, such as in the Philippines, said Todd Ross, director of trading for Lansing Olam Canada. It’s likely a reflection of the move to an open western Canadian grain market last year, similar to what happened in Australia after 2008, he said.
“When it was an open market, everybody went to find a place that was different and a margin could be gained,” Ross said.
“We’re going to do the same thing here.”
Wheat importers such as Iraq, Iran and Saudi Arabia may also buy Canadian spring wheat to blend with lower-quality supplies from Europe or the Black Sea region, said a Canadian grain exporter.
Last year, CWRS wheat averaged 13.9 percent protein, up from 13.1 in 2011 and 13.4 in 2010, according to the Canadian Grain Commission.
Canada is not the only exporter with big wheat supplies. Wheat also looks ample in the Black Sea region and Australia.
“This will be a buyer’s market, and the sellers are going to have to get very creative,” the wheat exporter said.
U.S. wheat exports are off to a torrid pace. Exporters shipped more wheat for the week that ended Sept. 12 than any time in at least the past 23 years. Most went to China and Brazil.
