It looks like this year’s weather-battered wheat crop will yield only around two million tonnes of top grade wheat.
The Canadian milling industry buys an average of 2.3 million tonnes of high quality spring wheat every year.
It doesn’t take a math genius to figure out that those numbers add up to problems in meeting the demands of domestic millers, as well as quality conscious overseas buyers in Japan and the United Kingdom.
The consensus among grain industry officials is that only about 10 percent of the red spring wheat will fall into the top grade. Optimistically, it could approach 15 percent.
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With the crop estimated to total about 16.9 million tonnes, that means the output of No. 1 CWRS will be 1.7-2.5 million tonnes.
It appears that about 60 percent will fall into the remaining milling grades, although no one is willing to say how much will be No. 2, 3 or 4.
The remaining 25-30 percent, accounting for 4.2-5.1 million tonnes, will be downgraded to Canada Feed.
Jim Thompson, the Canadian Wheat Board’s senior marketing manager for North American sales, said the marketplace will determine how those limited supplies of top quality wheat will be distributed this year between domestic and foreign buyers.
“It will be allocated by price,” he said. “It will find its pricing level and it will tell you which of those three markets is willing to pay a little more to prioritize it.”
For example, the costs of shipping high quality wheat from Alberta or western Saskatchewan to mills in Ontario may prompt some domestic bakers to look for substitutes.
“It may be cheaper just to buy gluten, so they’ll just fortify it with gluten, and then that wheat will move into the Japanese market,” he said.
Canadian processors may even look south of the border for high protein, high quality wheat to meet specific needs like bagel production.
“They’ll find what they need here or they’ll have to import it,” he said.
One milling industry official, who asked not to be identified, said he doesn’t think that will happen, as long there is a decent volume of No. 2.
“To the best of my knowledge, there is probably a sufficiently large crop, with a sufficiently large profile of 2, that the industry will manage,” he said.
The big issue for the milling and baking industry won’t be the tight supplies so much as the wide variability in the chemistry of the wheat.
This year’s crop has been subject to a wide range of degrading factors, including frost, green kernels, mildew, smudge, piebald and sprouting. Each of those has different effects on milling and baking characteristics such as flour extraction rates, kernel hardness, gluten strength, colour and soundness.
Millers and bakers can adjust their processing systems to deal with those kinds of problems, but it’s crucial that the wheat they receive is consistent from one load to the next.
“For the first time in a number of years, consistency could be an issue,” said Thompson.
Wheat from Brandon, Moose Jaw or Yorkton may all be downgraded to a No. 2 or 3, but for different reasons.
While grain buyers looking for top quality are going to have earn their money this year, he said, wheat processors will soon adapt to the harsh reality of this year’s crop.
“There will be glitches and bumps along the way and we’ll be in discussions with the millers on a regular basis,” he said.
“But we’ll figure out a way to get through it somehow. I’ve never had occasion not to find bread or pasta on the shelf.”
