WINNIPEG — While much of the grain trade seems ready to burst with optimism as it heads into a new crop year, that enthusiasm isn’t spilling over into feedgrains.
It won’t be easy selling low-quality wheat this year, the chief commissioner of the Canadian Wheat Board warned farmers whose crops are diseased with fusarium head blight. Improved crops elsewhere are expected to reduce the demand.
Initial prices remained at last year’s levels for both feed wheat and barley in last week’s announcement by the Canadian Wheat Board. Price outlooks are equally flat.
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The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
The price direction “is largely being dictated by the U.S. corn crop,” said Steve Schuetz, a wheat analyst with the National Grains Bureau. U.S. conditions have been near ideal. “They’re talking about nine billion bushels.”
Schuetz said that would go a long way towards replenishing feed supplies in the U.S. and shutting down the booming business Canadian feed-grain traders did into U.S. markets this past year.
If that doesn’t put the kibosh on plans to market south of the border, the looming prospect of U.S. trade sanctions against Canadian grain imports might.
Higher U.S. corn supplies may also make for stiffer competition in the South Korean market, a buyer that has been sourcing feed supplies from Canada in recent years.
Another factor weighing on feed prices is the large carryover. Canada is carrying about 12 million tonnes of wheat into the new crop year, and between eight and 10 million tonnes of that is 3 CW, Schuetz said.
The international demand right now is for high-quality, high-protein wheat. “The board has had people lined up for two years wanting to get high-protein wheat,” he said.
As for barley, it must compete against the feed wheat on the domestic market as well as the U.S. subsidies under the export enhancement program internationally.
Recent U.S. sales of barley to Israel for example were subsidized to the tune of $53 per tonne.
Schuetz said prices could be volatile through the summer weather market, but will likely drift downward through the fall. But he anticipates some improvement in prices around the beginning of the new calender year.
How the Canadian dollar performs in coming months will determine how many calves and feeder cattle are kept this side of the border for finishing, he said.If the dollar remains low, domestic feed demand will be higher.
