Russia is limiting its exports while shipments from the European Union are slower because of a feedgrain shortage
Canadian wheat exports continue to move at a torrid pace and are unlikely to slow any time soon, market analysts say.
According to Canadian Grain Commission statistics, Canadian wheat exports excluding durum stood at more than 9.2 million tonnes through the first 24 weeks of the 2020-21 crop year.
That’s an increase of nearly 29 percent over last year’s export pace.
Through 24 weeks of the 2019-20 crop year, Canada’s non-durum wheat exports were a hair higher at 7.1 million tonnes.
Canadian wheat is in high demand this year and there are reasons to believe that export volumes will remain strong for some time, said market analyst Marlene Boersch, who offered a market outlook during a Crop Production Week session held Jan. 12.
Boersch told growers that Canadian and American wheat is more competitive in world markets this year, citing Russian efforts to limit its wheat exports and slower exports from the European Union, where a shortage of feedgrains has prompted more wheat consumption in the livestock industry.
“These two items can only be supportive to wheat values and they will also be helpful to make the United States and Canada more important in wheat markets,” Boersch said.
Russian wheat exports have slowed considerably this year due to policies implemented by Russian president Vladimir Putin.
Putin’s administration has implemented a 17.5 million tonne export quota, designed to keep more Russian wheat out of global markets and available for domestic use.
In addition, Russia has implemented a wheat export tax of 25 euros per tonne, which is the equivalent of more than US$30.
Some experts believe that the Russian export tax could be increased to 50 euros per tonne, or more than US$60 in the near future, Boersch added.
The export taxes are designed to keep Russia’s domestic wheat prices low and ensure affordable bread prices for Russian consumers.
“That’s what president Putin would like to achieve and the first issue of export taxes hasn’t achieved that,” Boersch said.
“We might actually see an increase on that (tax), which I think would be positive for exporting nations of wheat.”
In Europe, exporters are also expected to sell less European wheat into global markets as livestock feeders scramble to find adequate feed grains.
“We anticipate that a lot more European wheat will be used for feed than in a normal year,” Boersch said.
In Canada meanwhile, selling opportunities are plentiful, prices are reasonably attractive, rail movements have benefited from an unusually mild western Canadian winter and supplies of Canadian wheat are ample.
Canadian wheat supplies were estimated at roughly 34 million tonnes this year compared to 31.8 million tonnes in the 2019-20 crop year.
Agriculture Canada projections suggest that Canadian wheat exports could hit 19.8 million tonnes in the current crop year, but analysts think the number could be higher than that.
Brisk Canadian wheat sales to China, Peru, Indonesia, Nigeria and the U.S. have pushed Canadian exports more than two million tonnes ahead of last year’s export pace.
Australian wheat is expected to be a much bigger factor in global wheat markets but global use is also expected to hit record levels this year, partly due to significantly higher consumption in China and Pakistan.
According to the Australian Department of Agriculture, Aussie wheat production in 2020-21 is expected to double to 31 million tonnes and Australian exports are projected to hit 21 million tonnes, compared to less than 10 million tonnes last crop year.
Boersch said Australian exports will affect Canadian sales abroad. However, Agriculture Canada’s export projection of 19.8 million tonnes is looking conservative.
Based on the pace of Canadian exports so far, “I think we can do a bit better than 19.8 million,” she said.