BANFF, Alta. — Grain flows will likely change in a deregulated market with more wheat and durum heading to the United States rather than to western ports, says the president of Louis Dreyfus Canada.
“U.S. demand will likely increase for Canadian wheat and durum as row crop areas move increasingly north into the Dakotas and Minnesota and displace U.S. wheat production,” said Brant Randles at the Alberta Barley Commission annual meeting in Banff Dec. 8.
Randles said the wheat board has always been a cautious seller into the U.S. because it feared being labelled an unfair trader as a single desk agency.
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He predicts two million tonnes of Canadian western red spring wheat could head south to American flour mills as farmers there shift to corn and soybeans.
Wheat and malt barley could continue to be good earners for prairie farmers but they may need to rethink the quality offered for sale.
Canada grows plenty of high quality wheat and cannot sell it all into premium markets. It offers commercially clean grain with superior protein and gluten. However, buyers may not want that.
“I think we grow too much high quality wheat. I think we have gone too far in the promotion of high quality wheat. The Canadian brand is costing you money,” he said.
He likened the trade to trying to sell nothing but BMWs when people want a more moderate car.
Canada needs to produce more high yielding, medium quality wheat like CPS because the world market wants more of that.
The board sells about 5.5 million tonnes of high quality wheat into Japan, the Philippines, Taiwan, the U.S., Peru and the United Kingdom. The mid quality markets are Saudi Arabia, Iran, Dubai, all of South America and Africa, which accepts about six to nine million tonnes.
While the quality may alter, the grading system will not. The Canadian Grain Commission has a reputation for quality assurance, grading and sanitary standards, he said.
“I don’t think that reputation will change and I don’t think we are going to abandon our grading system.”
As for barley, that business has waned in recent years in North America because the returns are lower.
“Barley is becoming a very marginal crop in the U.S.,” said Russ Crawford, president of Agrinomics I.T. Consulting Ltd.
He is conducting a study for the Western Barley Growers Association that has revealed opportunities and weaknesses under a new system.
Australia, Argentina, Russia and the Ukraine are increasing production but the Canadian volume is shrinking. As crops get smaller it is more challenging to trade and fewer people want to handle it.
Canada has a good reputation for producing high quality malt barley and it is a competitive crop on a per acre basis.
However, a large percentage of the crop falls into the unacceptable category so if it is not selected for malt, it is graded as feed.
Crawford said there is demand for mid to lower quality malt barley and higher quality feed. A lower price may be offered for the high end grain but higher prices could be paid for the mid quality.
He suggested a need for more intermediate grades and said more varietal research should be run to produce mid quality malts.
Statistics Canada reported 5.8 million acres were seeded to barley in 2011. About 70 to 80 percent of those acres were dedicated to malt varieties but not all are accepted, said Rob Green of Central Ag Marketing, which specializes in marketing malt barley.
There is less than half a million tonnes in demand for malt barley because beer consumption is falling in North America and Europe.
Under a new regime, malt growers can expect more contracts and improved access to domestic and U.S. maltsters, said Green.
