Two familiar names should resume their usual position near the top of importers of Canadian wheat in the coming year.
The United States and China are both expected to buy significant quantities of prairie farmers’ wheat this year, say Canadian Wheat Board officials.
Sales of hard red spring wheat to the U.S., which had been virtually eliminated by punitive import duties for the past three years, are expected to return to pre-tariff levels of around 1.1 million tonnes.
“Provided the crop comes off the way we anticipate and the protein holds on, then there’s no reason to believe we won’t be back in there at traditional levels,” chief executive officer Adrian Measner said during the board’s annual crop year-end news conference.
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When that’s combined with durum sales expected to be around 500,000 tonnes, the U.S. will rank near the top of the list of Canadian grain buyers.
He added that while the board has learned to take nothing for granted when it comes to U.S. trade, he doesn’t expect the increased imports will trigger any further attempts by U.S. growers to close the border.
As for China, the board expects the world’s most populous nation to be back in the market for about 1.5 million tonnes of wheat this year.
China is the world’s biggest wheat producer and perhaps its most unpredictable wheat importer, with annual purchases since 2000 ranging from a low of 200,000 tonnes to a high of more than eight million.
Imports were around 2.5 million tonnes in 2005-06, with Canada supplying about 310,000 tonnes, a total that was limited by a shortage of the quality, high protein wheat that China likes to buy from Canada.
For 2006-07, China is forecast to import up to 1.5 million tonnes.
“If we have the quality, we can traditionally expect to supply in the order of one-third to one-half of that,” said Measner. “It’s not going to be a large program, but if we have the right quality we’ll certainly be in there.”
The board is projecting a total export program of 17.5 million tonnes for 2006-07, consisting of 12 million tonnes of wheat, 3.5 to four million tonnes of durum and two million tonnes of barley.
That’s up from the 16.5 million tonnes exported in the 2005-06 crop year.
The export forecast is based on the board’s latest production estimate of 19.1 million tonnes of wheat, 3.6 million tonnes of durum and 9.8 million tonnes of barley. That total of 32.5 million tonnes is down about 1.5 million tonnes from last month’s crop forecast, due to hot weather and lack of precipitation in recent weeks.
Measner said world wheat market fundamentals hold the promise of better prices, with production for 2006-07 forecast to be 590 million tonnes and consumption 617 million tonnes.
That shortfall means world stocks should be reduced by some 27 million tonnes, resulting in a stocks-to-use ratio below 20 percent.
“That’s a figure that people start to get concerned about,” said Measner.
Wheat crops are suffering from dry conditions around the world, including major production regions like the U.S., Australia, Argentina and the Black Sea region, which is positive for the market.
“A lot of thing have been driving the market and there are still things developing that could impact it further,” said Measner.
