SASKATOON – Just two months into the new crop year, rallying world grain prices have prompted the Canadian Wheat Board to recommend initial payments to prairie farmers be increased.
In its latest price forecast, the board estimated No. 1 Canada Western red spring wheat will fetch a record price of $226-$236 per tonne at port position in Vancouver or the St. Lawrence. That’s equal to $6.15 to $6.42 per bushel.
Those estimates are at least $66 per tonne, or $1.80 per bushel, more than initial prices set at $160.
Those prices, released at the end of July, were the highest the board has set in 10 years.
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Wheat board chief commissioner Lorne Hehn said the request for an interim initial payment has already gone to federal agriculture minister Ralph Goodale, but it will need to go through an order in council before it is released.
Hehn is confident the increase is justified, with the wheat crop in the northern hemisphere relatively complete and no possibilities for increased production in the southern hemisphere.
“We can’t see any significant downward price movement in the next four or five months. We think prices will remain very strong, at least until March,” he said, referring to the time when markets can gauge the size of the U.S. hard red winter wheat crop.
Hehn said it is unusual for prices to be raised this early in the crop year, but unusual things have happened in world markets, including simultaneous troubles in both wheat and coarse grain crops.
In one month, Hehn said world wheat production has fallen by about five million tonnes. Drought has cut Argentina’s wheat crop and an uncharacteristic late frost in Australia hurt wheat and barley quality. Lingering drought has also reduced Australian yields.
“It pretty well rules out a bumper crop,” Hehn said.
In addition, domestic shortages and high internal prices in Europe, have forced the European Union to limit subsidized international grain sales since July. The ban is scheduled for review Oct. 12.
Stocks are so tight in the U.S. that for the first time in 10 years, no sales of grain subsidized by the Export Enhancement Program have been made since August.
“The real world price can now come through,” Hehn said. “It’s one of the main reasons we’re seeing these PROs (pool return outlooks).”
