The dissolution of the Australian Wheat Board might provide an opening for wheat growers in Western Canada, says the chief executive officer of the Canadian Wheat Board.
Ian White said customers of the Australian board have contacted the CWB because they are concerned about the end of the single desk in Australia.
“When it was a single desk operator, it (the AWB) had the ability to offer year-round supply, because it always knew that it would get the product,” White said.
“We’re now seeing customers in a number of markets who had previously been used to that supply from the AWB, unable to get that (supply) now to the same extent they were in the past, because the AWB is just one the players out of Australia now.”
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Although it wasn’t heralded on this side of the globe, June 30 was an historic day for Australian farmers because after nearly 70 years as a single desk, the AWB’s monopoly position came to an end.
A kickback scandal, in which the AWB gave $220 million (Aus) to Saddam Hussein’s regime to secure wheat sales to Iraq, was the primary reason behind its demise.
The AWB will now compete with Australian millers and bulk handlers and agribusiness giants such as Cargill, which all want a piece of Australian wheat exports that have averaged 17 million tonnes annually over the last five years, according to AWB data.
The uncertainty surrounding the deregulation in Australia has many in the industry, including White, skeptical that the AWB will be able to acquire all the wheat it needs.
“They have to rely on their ability to originate from farmers, before they can go out too far, in terms of selling it,” White said.
“(So) their ability to sell to all the customers they used to, year round, is diminished.”
Asked if the CWB is pursuing AWB customers, White said wheat importing countries are approaching the board. However, he would not reveal the names of such countries because that would compromise the board’s marketing intelligence.
Stan Skrypetz, a wheat market analyst for Agriculture Canada, is taking a wait and see approach to Australian deregulation.
He is unsure how the changes will affect Australian wheat exports, but he believes Canada might have an export edge this year because of low world stocks.
“The (Canadian) wheat board will have an advantage at the beginning of the season,” said Skrypetz, because the Australian harvest is typically in December and stocks are low in Australia.
“And stocks are down in a lot of countries … and we will be able to ship it earlier than the Australian crop.”
After two poor harvests in 2006-07 (11 million tonnes) and 2007-08 (13 million tonnes), Australian wheat production is expected to rebound this year, thanks to more rainfall and more seeded acres.
The International Grain Council forecasts an Australian harvest of 23.5 million tonnes.
The CWB believes western Canadian farmers will produce 16.9 million tonnes of wheat this year.
Skrypetz said one of the key battlegrounds for wheat exports will be Iran, where drought has hammered crop production.
The country is expected to import 4.3 to five million tonnes this year, compared to last year when it imported 100,000 tonnes of wheat.
While Australia may be the major exporter on the CWB’s radar, a larger U.S. wheat crop should also affect the export trade.
Based on U.S. Department of Agriculture estimates in July, U.S. production of all wheat is forecast at 2.46 billion bushels, up from 2.07 billion bu. last year.
A chunk of that increased production will help rebuild U.S. stocks, but a weak U.S. dollar should boost export sales this year, said Edward Usset, a grain marketing specialist with the University of Minnesota.
He said other wheat exporting countries are not harvesting a high quality product, which should benefit the United States and Canada.
“Ukraine is a big hard wheat producer, and they’re having quality problems, with the majority of their crop being a feed wheat crop. That bodes well for North American exports.”
