Canadian and American farmers are watching big and beautiful spring wheat crops develop, but that won’t necessarily cause new-crop prices to collapse.
Market analysts say growing conditions in other big wheat producing countries are much worse so farmers on the North American plains could get the best of both worlds if they are lucky: big crops and high prices.
“We have in place a foundation sufficiently strong enough to have a significant price rally in both the wheat and feed grain markets,” said Kansas State University commodity market analyst William Tierney.
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Even if weather problems in other parts of the world clear up and world wheat prices don’t reach the heights seen last fall and early winter, prairie farmers will still be much ahead of last year, said commodity broker David Reimann of Benson Quinn-GMS.
“We might not see those spectacular prices but if we get more yield we don’t need them,” said Reimann, who attended the Canadian Wheat Board’s crop condition conference June 12.
“If you get average (yield and price) numbers you’ll make more money in the long run. It doesn’t matter if you have $10 a bushel prices if you don’t have a crop.”
Both the CWB and the United States Department of Agriculture reports showed western farmers experiencing far better conditions than last year at this time.
Tierney said his own forecasting model shows the American prairie spring crop is in better condition than it has been for the 18 years he has surveyed it.
The wheat board shows increases in the major crops as well. It says prairie farmers will probably produce 18.3 million tonnes of wheat compared to 10.4 million last year, 4.9 million tonnes of durum (3.7 million), 3.7 million tonnes of oats (2.3 million), 12.7 million tonnes of barley (6.2 million), 900,000 tonnes of flax (700,000) and 5.7 million tonnes of canola (3.5 million).
The board expects average yields to be 33.9 bu. per acre of wheat, including durum.
The huge change from last year is due to timely rains, which have rebuilt soil moisture levels and given growing crops constant support.
Tierney said problems with the wheat crops in eastern Europe, Russia and Ukraine will probably mean that wheat prices will have good upside potential.
The story is not so good for durum. Excellent growing conditions in North Dakota and on the Canadian Prairies are being matched by conditions in North Africa, which is the major market for the crop.
This year, farmers in Morocco, Algeria and Tunisia are expected to harvest four million tonnes of durum, well above their average 2.7 million tonne harvest.
Reimann said big prairie crops, if they can be carried through to harvest, will be good for farmers who will finally, after two years of drought, have something to fill their bins. But they will also be good for the entire grains industry, which relies on big volumes of grain to keep it afloat.
All in all, farmers and the industry should be happy.
“It certainly looks a lot better than last year at this time,” said Reimann.
