VULCAN, Alta. – History is repeating itself in the world grain trade.
The current scenario of low grain stocks and high prices is similar to the 1973-75 period. The major difference is that an additional one billion people, mostly in Asia, are hungry for grain.
Farmers attending the Canadian Wheat Board’s annual grain day in this southwestern Alberta town were told a population surge and widespread movement of rural people to cities have affected Asian buying habits.
Expanding market
“In spite of the higher prices we’ve still seen higher demand out there, especially from Asia Pacific countries where a more prosperous population is shifting from rice to grain-based products,” said Larry Sawatzky, a market analyst for the wheat board.
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Canada is answering the demand by increasing production.
Agriculture Canada predicts 24 million acres will be seeded in Western Canada to non-durum wheat, up about 10 percent over 1995.
It’ll take about two years to rebuild depleted wheat stocks so good prices are expected to hang around for some time, said Sawatzky.
“You’re going to see an increase in production…but you’re not going to see a dramatic fall in prices, especially in the coming year.”
U.S. winter wheat acreages are up by seven percent but conditions are poor due to drought last summer and this winter’s arctic temperatures.
The world durum trade of six million tonnes is not as positive for Canada as it was last year. A major drought has ended in North Africa and Spain, where a large share of the world’s durum is grown and competes directly with Canada.
Durum acreage is expected to increase by about 10 percent.
Coarse grain production is expected to go up and much more U.S. corn is anticipated next fall. Prices may also drop slightly.
International barley stocks are down but production is increasing to make up for shortfalls. Agriculture Canada projects a three percent increase, or about 11 million acres, going into barley in Western Canada.
Malting barley exports increased substantially internationally, mostly because of interest from China. That trend is expected to continue.
Australian drought helps Canada
Canada has captured just less than 50 percent of the world malting barley market. About 20 percent of the barley submitted made malt, compared to about 10-15 percent on average. This large share of the market was stolen from Australia where yields slipped substantially because of a lengthy drought.
“Malting barley trade should be similar to what it was this year,” Sawatzky said.
The board expects less malting barley will be imported by the U.S. this year which could affect those who grow six-row since that’s what the American maltsters prefer. However, Chinese demand is expected to remain the same.
