The global economic meltdown has been a mixed blessing for the Canadian Wheat Board in marketing the 2008 crop.
On the negative side, grain prices fell as money was pulled from commodity markets and customers adopted a cautious, hand-to-mouth approach to buying grain, waiting for prices to go lower.
On the positive side, the slowdown in demand for other commodities freed up railway and lake freight capacity, enabling the board to ship more grain than expected in the last few weeks of the eastern shipping season.
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With all that taken into account, the board has set a 2008-09 export target of 17.7 million tonnes, up from the 17.3 million tonnes exported in 2007-08.
This export target includes 12.7 million tonnes of wheat, 3.4 million tonnes of durum, a record 1.4 million tonnes of malting barley and 200,000 tonnes of feed barley.
The previous record for malting barley was set in 1997-98 at 1.3 million tonnes.
The latest Pool Return Outlook projects a Saskatchewan farmgate return of $246 a tonne for top quality spring wheat, $297 for durum and $253 for malting barley.
Ward Weisensel, the board’s chief operating officer, said the agency had initially expected to ship 1,300 to 1,400 rail cars to Thunder Bay each week from early November to the close of navigation at the end of December.
As it turned out, it was able to move more than 2,000 cars a week throughout that period.
Weisensel doesn’t believe that would have been possible if not for the additional rail and lake capacity.
“Those two things lined up very well and it was very positive for our shipping program,” he said.
At the same time the board was encountering some reluctance from customers to step into the market in a big way, as they watched both commodity prices and ocean freight falling.
“They were concerned that if they bought this week, their competitors might be able to buy next week at a lower value,” he said. “That made things challenging.”
Commodity markets have since stabilized somewhat and ocean freight is unlikely to drop any lower, he added, so the marketing side has returned to a more normal condition.
The wheat market has been competitive this crop year, with Australia in particular pricing aggressively in Asian markets and beyond.
Asked whether the board had to discount prices sharply to remain in some of those markets, Weisensel said the agency always has to price to the market.
“We’re pricing on a regular basis that will enable us to execute the business, recognizing that we also try to make as much money for farmers as we can from the grain available for sale,” he said.
The board has adopted what it calls a staged approach to accepting wheat for delivery, in light of the large crop and the global environment.
Series A acceptance levels were set at 80 percent for CW red spring and 60 percent for CW amber durum. The sign-up deadline for Series B contracts is Jan. 31.
