Expectations of lower prices in 2002-03 will likely ensure steady grain
deliveries for the remainder of this crop year.
The prospect of a drought-reduced crop looming in many parts of the
Prairies might be expected to prompt farmers to hold inventory over to
the new marketing year.
But a senior Canadian Wheat Board official says while that might happen
to some extent, farmers will likely be more concerned about taking
advantage of this year’s higher prices.
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“If we were going into a scenario with a higher price next year or the
same price, there might be a tendency to hold more, but we’re certainly
not seeing any sign of it yet,” said Adrian Measner, the board’s
executive vice-president for marketing.
The pool return outlook for spring wheat 2002-03 is about $7 a tonne
lower than for 2001-02. For durum, it’s about $15 a tonne lower for
next year.
Measner said the board does expect that in particularly dry regions,
producers may reduce deliveries within the tolerance of their CWB
contracts, but that won’t be widespread.
“There’s no question in some areas we’re likely to see some adjustment
in their delivery patterns, but I don’t think from an overall
perspective it’s going to be substantial,” he said. “We don’t see a
significant difference from the numbers we’ve used to put together our
marketing plan.”
That plan calls for the board to export 16 million tonnes of wheat,
durum and barley in the 2001-02 crop year. As of May 31, the board had
shipped 12 million tonnes and Measner said the agency should have no
problem meeting the year-end target.
Wheat market analyst Glenn Lennox said the pace of grain deliveries
over the next couple of months will depend on how farmers assess the
outlook for production and prices.
“If they’re in an area that’s dry, or they know how dry it is in
Saskatchewan, they may decide to hedge their bets and not sell it all
this year in anticipation of the price going up next year.”
Current forecasts of lower prices in 2002-03 are based on normal
yields, he added, and a drought-reduced crop could change that outlook.
As is usually the case, grain deliveries dropped off sharply during the
past month as farmers turned their attentions to seeding. Elevator
space across the Prairies climbed from an average of 29 percent on May
4 to 42 percent as of May 25.
“That’s a little bit more space than we saw last year, but it’s not a
huge concern,” said Will Hill, vice-president of Saskatchewan Wheat
Pool’s grains group.
Hill said the feeling in the industry is that there are about one
million tonnes of wheat that might be delivered, depending on the
weather and price outlook.
“Ideally we’d like to see all that come in this year and also get lots
of rain and a big crop to handle next year,” he said. “We certainly
have the space to handle it.”
To the end of May, farmers in Western Canada had delivered 20.2 million
tonnes of the major grains and oilseeds, not including special crops.
That is down from 25.3 million tonnes at the same time last year.
Measner said the slow pace of deliveries in the last month isn’t
causing problems for the board in meeting its sales commitments.
“If we had large programs, then 40 percent space could be a problem,
but the bulk of the exports have been done and the programs are lighter
at this time of year.”
