The roaring rally in crop prices has Canadian farmers smiling, but it’s creating a lot of furrowed brows and worried looks on overseas buyers’ faces.
They fear they might not be able to get the quality crops they need if frantic competitors snap up corn alternatives such as wheat.
“The demand for wheat from Argentina that comes from Europe or other countries will increase (because of droughts in the U.S. Midwest and the Black Sea Region), so I think the price will go up,” said Marcio Cunha de Paiva, a wheat product-focused research and development co-ordinator with Bunge in Brazil.
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Brazil often gets most of its wheat imports from neighbouring Argentina, but might have to broaden its search this year.
“Now you have to be open to look at the other markets — Canadian, Russian — to see what price and the quality, because I think the quantity of Argentine wheat will decrease (as foreign buyers compete for Argentina’s wheat).”
Malaysian miller Noor Hafiza Abdul said her company, Seberang Flour Mill, is worried that quality wheat will get sucked into the vacuum created by the shrinking corn crops.
“Of course everybody is talking about price, but quality is the main concern because the money is asking for the quality,” said Abdul.
“We can have the wheat, but (it is) high in price and the quality is not there.”
Peter Park, assistant manager of the Korea Flour Mills Industrial Association, said his organization’s members know the corn rally will pull wheat prices higher, even if the world has lots of wheat.
“Their prices are well-connected,” said Park.“Eventually the world wheat price will be influenced.”
Park, Abdul and de Paiva were interviewed during the Canadian International Grains Institute’s International Grain Industry program, where they and 12 other participants from 11 countries learned some of the intricacies of Canadian grain quality and grading and how the grain system operates.
They were busy throughout the 10-day program, but all had kept apprised of the drought disaster striking the U.S. Midwest and the problems in the Black Sea region.
With continued dryness forecast for the U.S. Midwest and the former Soviet Union estimating substantial production losses, many analysts expected the rally to continue.
