Canadian Wheat Board chair Larry Hill put it simply when summarizing the 2007-08 crop year.
“The big story in ’07-’08, of course, was prices,” said Hill, speaking to reporters in Winnipeg July 31, the last day of the crop year.
The incredible run-up in wheat, durum and barley prices during the crop year immensely helped the bottom line at the CWB, which announced $7.7 billion in revenue for 2007-08. The record income represents a 57 percent increase from the 2006-07 crop year, when the board had revenue of $4.9 billion.
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Chief executive officer Ian White said the board’s selling strategy led to an additional $560 million of pooled returns, compared to American farmers, who sold their crop earlier and at lower prices.
In a news release, the CWB said that figure was based on pooled returns for Canadian spring wheat and durum, versus U.S. Department of Agriculture monthly weighted farm receipts for wheat and durum from North Dakota and Montana.
“There was a definite advantage in this year’s market, for a single seller… (the CWB) gets the effect of full year pricing,” said White, who noted that most U.S. wheat growers sold in the fall of 2007, before prices spiked.
In contrast, the CWB pooled returns were about $8.50 per bushel for wheat.
During interviews after the news conference, White was asked by reporters whether the better pooled returns were just luck. If prices had declined during the year, the CWB would have been in a losing position, a reporter commented.
White said that the CWB’s analysis was based solely on this year, but defended the board’s pricing strategy.
“When (U.S.) farmers saw prices at $6–$7 per bu. (last fall), they saw those as historically quite good values, so they took advantage of those,” White said.
“What our methodology is, is more of an average pricings through the year… (so) we weren’t as fully priced early on.”
White also presented statistics on CWB exports for the 2007-08 crop year.
Indonesia was the CWB’s biggest wheat customer for the second year in a row, buying 1.37 million tonnes. Japan was next, at 945 000 tonnes, and the U.S. third, at 740 000 tonnes.
Overall, the CWB exported 11.3 million tonnes of wheat, 3.1 million tonnes of durum, 1.6 million tonnes of feed barley and 1.3 milion tonnes of malting barley.
Domestic malting barley sales were 1.1 million tonnes, yielding total malting barley sales of 2.4 million tonnes, the highest for the CWB in eight years.
Looking ahead to this year’s production, the CWB is concerned about the cool temperatures this summer on the Prairies.
White pointed to a temperature map of the region, coloured blue and green to illustrate how cool it’s been in June and July. The data indicated that weather has been 2 to 3 C cooler than normal in the eastern part of the Prairies, and up to 5 C colder in southern Alberta.
The slow developing crop may push back harvest dates, which increases the risk of frost damage, White said.
As a result, the CWB is lowering grade expectations for this harvest compared to last year, when 70 percent of the wheat crop was in the top two grades.
