Next to 1974, if there was year to discover nearly a million tonnes of wheat, 1995 would be a good choice.
In its latest estimate of Canada’s 1995 crop, Statistics Canada has done exactly that.
The November estimate of production of principal field crops put Canadian wheat output at 25.3 million tonnes, about one million tonnes more than the same estimate in September.
That kind of extra supply, at least in a normal year, might have sent prices down.
Not this year. The StatsCan report caused a pause, all right, enough for the markets to digest that extra million tonnes, offset it with news the Australian crop has lost 400,000 tonnes due to rain during harvest and then keep heading up, said Ron McDaniel, with Refco, Inc. in Minneapolis.
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The market is reacting to news from other sources, McDaniel said. American stocks in terminal positions – Duluth, Chicago and Toledo -Êare the tightest they’ve been since the mid-’70s.
Other factors include the European Union’s export tax on wheat, which has had the effect of driving world prices higher than EU domestic prices; questions about Russia’s grain supply and, some say, its inevitable need to buy; and reports of possible winterkill to the U.S. hard red winter wheat crop.
Don Bonner, analyst with the Canadian Wheat Board’s crop surveillance department, said parts of the Texas and Oklahoma panhandle reached -14 C over the weekend.
With the crop not yet in dormancy, and struggling because of a dry fall, Bonner said the markets will be “watching every cold front” that comes through this winter.
Of course, all of this drama is played out with the backdrop of low world wheat stocks.
Glenn Lennox, wheat analyst with Agriculture Canada’s grain policy directorate in Winnipeg, said even though Canada’s 1995 wheat crop is bigger than 1994’s, total supplies of wheat are less because of a smaller stocks at the start of the crop year.
That carryover went from more than 11 million tonnes at the beginning of July, 1995 to 5.9 million tonnes as of July, 1995.
What that means, Lennox said, is Canada will export less wheat this year than last year. Ag Canada’s estimates are 17.9 million tonnes.
But Lennox has added all of StatCan’s “found” wheat into the Canadian wheat board’s export equation.
“One million tonnes more is gravy,” Lennox said. “It should allow the board to expand its sales program, at very attractive prices.
