Canadian Wheat Board exports this year will be at the lowest level since the drought of 1988-89.
And Canada’s share of the world wheat market will drop as low as 15.5 percent from a 10-year average of 18.7 percent.
But just because market share has dropped doesn’t mean the wheat board is doing a poor job selling farmers’ wheat, durum and barley, said CWB market analyst Larry Sawatzky.
He was responding to a commentary in the National Post written by Morris Dorosh, editor of Agriweek and Agriline newsletters.
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“It’s no secret that he doesn’t agree with the wheat board marketing system,” said Sawatzky.
“You have to kind of take what he says with a grain of salt.”
Dorosh criticized the wheat board for its slower export pace and projected lower market share.
At the end of January, wheat board exports were down 41 percent from last year’s rate, and 30 percent from the five-year average.
“It is down. He is right,” said Sawatzky. “We’d certainly like to maintain a steady market share.”
But this year, maintaining market share would have meant aggressively competing in an already depressed world wheat market, said Sawatzky.
This would have pushed wheat prices even lower, hurting farmers’ returns, he said.
Dorosh’s article failed to mention that farmers cut wheat acres last year, noted Sawatzky.
“The main reason that exports are down this year, especially for wheat, is because supplies are down this year,” he said. In 1998 Canada produced a spring wheat crop of 15.9 million tonnes, down 16.3 percent from the year before.
Ten years ago, when the wheat board had a small crop to export because of drought, market share fell to 12 percent, said Sawatzky.
The 1998 wheat crop had high protein levels, he added. To maximize farmers’ returns, the wheat board is targeting customers who are willing to pay premiums for the grain.
These customers tend to buy steadily over the course of the crop year, said Sawatzky.
World wheat markets bottomed out in September. As prices have gradually increased, the wheat board has put more sales on the books.
The sales department won’t release how much grain has been shipped to date.
But Sawatzky said the board has sold 80 percent of its export targets.
World wheat demand has also been shaken by economic problems around the globe.
Buyers in Latin America, Asia and Russia have had their buying power pulled out from under them in the form of currency devaluations.
Buyers in the Middle East and northern Africa have been hurt by lower revenues because of sinking crude oil prices, killing some of their import demand.
Canada will have higher ending stocks this year, including 24 percent more wheat and 130 percent more durum than last year, according to Agriculture Canada.
“This isn’t a phenomenon specific to Canada,” said Sawatzky, who noted U.S. wheat stocks are projected to be 32 percent higher.
The wheat board forecasts European wheat stocks to be 36 percent higher than last year, he said.
