Mexico, Colombia big buyers | Wheat a good alternative to high priced corn
North American wheat sales have been strong despite a glut of product in the world market.
Canada exported 5.66 million tonnes of the crop through the first five months of the 2011-12 marketing campaign, up 16 percent over the same time last year.
“It’s going well,” said Bruce Burnett, the Canadian Wheat Board’s director of weather and market analysis.
“We’re on track to hit our targets more or less. I don’t see any problems developing yet at this point in time at least.”
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Wheat demand has remained strong despite financial troubles in the European Union and the United States, an encouraging sign.
“We anticipate that that’s going to continue here into the spring,” said Burnett.
It’s a similar story south of the border where the U.S. Department of Agriculture reported a “stronger-than-expected” pace of wheat sales in its Feb. 9 World Agricultural Supply and Demand Estimates.
The USDA boosted U.S. wheat exports by 680,000 tonnes from its January estimate, primarily due to good sales for competitively priced feed wheat into Mexico and South Korea.
Canadian wheat sales are way up to Latin American countries due to a shortfall in the U.S. Hard Red Winter wheat crop and a return to normal quality in Canada.
Mexico had purchased 617,700 tonnes of Canadian wheat as of Dec. 31, a 110 percent increase over the same time last year. Sales to Colombia were 402,700 tonnes, up 145 percent.
Latin American countries are quality conscious buyers who typically choose between U.S. winter and spring wheat and Canadian wheats.
In the case of Mexico, the demand has been spurred on by a drought in that country that has pushed corn prices up. Wheat is a good substitute for corn.
Japan has been another big buyer of Canadian wheat this year, importing 420,400 tonnes of the product between Aug. 1 and Dec. 31. That is up 58 percent from year-ago levels.
“In the post-tsunami world, we’ve seen an increase in demand from Japan,” said Burnett.
The earthquake and subsequent tsunami that hit Japan on March 11, 2011, damaged some port facilities, causing a slowdown in imports of a variety of goods.
The country is in the process of rebuilding its depleted food reserves. Consumers are also stocking their cupboards because they feel more comfortable having food supplies close at hand after such an enormous tragedy.
Burnett doesn’t expect many negative repercussions for the wheat industry from the trade and financial sanctions imposed against Iran by the United States and the European Union in response to concerns over Iran’s nuclear program.
Shippers of rice and palm oil have had trouble receiving payment due to the sanctions. Iran can be a sporadic buyer of wheat but in most years, it is largely self-sufficient.
Burnett said the only big negative for wheat markets has been the disappointing prices.
“Prices generally have been weakening over the past six months or so,” he said.
