SASKATOON – Initial payments continue to venture into uncharted territory.
Canadian Wheat Board officials say there is likely more to come for grain sold to the board this crop year.
Based on the agency’s latest estimate of final returns for 1995-96, “there’s still more room” for increases, said Bob Roehle, the board’s director of communications.
The selling agency announced last week that as of May 27 initial payments would go up by $20 a tonne for all classes and grades of wheat and $15 a tonne for all feed and designated barley.
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The new initial payment for 1 CW red spring wheat, in-store at export position, will be $236 a tonne, higher than it’s ever been before. The previous high was $222 in 1980-81.
For a farmer in central Sask-atchewan, the new initial translates into a farmgate price of $188 a tonne, or about $5.12 a bushel. Farmgate prices may have been higher back in the days when farmers paid the extremely low Crow freight rate to ship grain to market.
Even low is high
A good indication of the strength of this year’s wheat market is the price for the lowest grade of wheat, Canada Feed. Only once, back in the drought year of 1980-81, has the initial payment for the top grade of 1 CWRS been any higher than this year’s Canada Feed initial payment of $203 a tonne.
And the price increases probably aren’t over yet.
For example, for 1 CW 13.5 percent protein the initial payment is $251 a tonne, while the estimated pool return is $277, a difference of $26 a tonne. For 1 CW amber durum, the new initial of $246 a tonne is still a whopping $47 below the EPR of $293 a tonne.
For 1 CW feed barley, the initial is $190 a tonne, compared with the EPR of $208, while for malting barley the gap between the initial and the EPR is about $15 a tonne.
While the EPR is not a guaranteed price, Roehle said that by this time of year it’s a pretty firm number.
“By this stage of the game, close to 80 percent of the crop is sold, maybe even more,” he said.
And any grain that has yet to be priced, for example some wheat and barley sold on weekly tenders to Japan, is being sold into an extremely buoyant market and should fetch a good price. “Indications are these prices will hold,” said Roehle.
Adjustment payments covering wheat and barley sold up to May 26 will be mailed out to farmers the week of June 17. It’s the fourth time this year that initial payments have been increased.
