Amidst all the political turmoil in the Middle East is a steadily improving wheat crop.
Timely rain has resuscitated a crop that was struggling during seeding time because of drought.
In December, the U.S. Department of Agriculture’s Foreign Agricultural Service felt the drought would shave 10 to 20 percent off Iraq’s potential production.
Other analysts thought Iran’s wheat crop was in even worse shape, boosting hopes that the Middle East would be a big buyer of Canadian wheat in 2011-12.
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Flash forward three months and the production outlook for the region has vastly improved.
“Their prospects of doing a big wheat import program are greatly diminished,” said Canadian Wheat Board market analyst Neil Townsend.
He said he spoke to a respected fellow analyst from Chicago in December who felt the drought would increase Middle East wheat imports by 16 to 17 million tonnes from the previous year. The same analyst has since reduced that estimate to six to seven million tonnes.
The wheat board’s weather department is forecasting imports from the region will be the same as last year.
Townsend thinks purchases may end up falling in between the two extremes.
The wild card is the political instability in Iran.
Townsend speculates that Iran’s government may want to bolster its wheat supplies to avoid any chance of food price inflation or food security issues in that volatile country.
“They don’t want people who are already somewhat restless to be more restless,” he said.
Iraq and Iran tend to be big buyers when they are in the market for Canadian wheat.
Iraq bought 1.79 million tonnes in 2008-09, second only to the United States. Iran purchased 1.13 million tonnes the following year, which again ranked second behind the U.S.
Iraq imported 51,300 tonnes of Canadian wheat in the first seven months of 2010-11.
Townsend said Iran hasn’t bought wheat from anybody this year.
The head of Iraq’s grain trading board recently said the country will import more than 2.8 million tonnes of wheat this year, up from 1.9 million tonnes last year, to rebuild stocks depleted due to crumbling storage infrastructure.
