As of last week, it appeared that only one in four bushels of wheat will fall into the two top grades this year, says the chief executive officer of Agricore United.
And that could decline even further if the harvest continues to be plagued by bad weather.
“The industry estimates as of today are that no more than 25 percent will be No. 1 and No. 2,” Brian Hayward said Sept. 16.
Last year, more than 90 percent of the wheat crop fell into the two top grades.
Read Also
Geopolitics can change trade routes
WHISTLER, B.C. — Today’s geopolitical tensions could have dire long-term consequences, says the director of international policy at the University…
The big question to be answered, said Hayward, is how much of that remaining 75-80 percent will be No. 3, which is still suitable for milling, and how much will be downgraded to Canada Feed.
“Right now, there is optimism that there is still a lot of No. 3 out there,” he told reporters and market analysts on a conference call to discuss the company’s third quarter financial result.
As for the canola crop, Hayward was reluctant to guess as to the grade breakdown, saying there are two canola crops this year.
A fair amount was seeded early and has been harvested in fairly good quality. However, a significant amount was seeded late and could be in trouble.
He said he recently took a photo of a Manitoba canola field in bloom surrounded by trees that were turning colour.
Hayward acknowledged that it’s difficult to make definitive statements about the quality of the 2004 crop, given that only about five percent was harvested as of last week.
But the grain industry, and western Canadian agriculture in general, have taken a huge financial hit from the frost and wet harvest weather, he said.
“It’s a very serious issue for the industry.”
He added that his “back of the envelope” calculations indicate that $1-$2 billion in value has been wiped out in the past six weeks.
Most of that loss will be suffered by farmers, who are watching the value of crops decline with every day of wet weather.
Grain handling firms will suffer loss of revenue as a result of lower than expected yields, and may be hurt further if a significant amount of feed quality wheat and barley are consumed on the farm or in local markets rather than moving through the elevator system to domestic or export buyers.
One potential new source of revenue for grain handlers this year will be from grain drying services, although it’s something they would just as soon not have to do.
“We didn’t use our dryers last year. This year, they’ll probably be going flat out,” Hayward said.
