Wheat prices are breaking through price ceilings not seen for three decades.
But western Canadian farmers, while happy about the prices, aren’t thrilled about their wheat.
That’s because the sale price is only one part of the production equation, and production this year was both expensive and disappointing for most farmers.
“We invested a lot in this crop, so we need to get a good return,” said David Rolfe, an Elgin, Man., farmer and president of Keystone Agricultural Producers.
Rolfe’s lukewarm review of the 2007 wheat crop was echoed by Bill Dobson, the Paradise Valley, Alta., farmer who is president of Wild Rose Agricultural Producers.
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“It’s put renewed optimism out there, but the prices aren’t higher than they were 30 years ago,” said Dobson, who was at home, watching with frustration Aug. 27 as rain pelted his crop.
“The price isn’t higher than 30 years ago, but the input prices are.”
Rockglen, Sask., farmer David Marit, president of the Saskatchewan Association of Rural Municipalities, was the most upbeat of the three rural leaders, even though much of his wheat crop had been beaten down by hail.
“It’s finally some good news. It’s great,” said Marit, who was driving a truckload of wheat from the hailed field to his bins.
“But it’s late. This year we got scared because the input prices jumped before the crop prices caught up. Now some producers can get a profit.”
Wheat futures prices have shot through the $7 US per bushel level of some U.S. commodity exchanges, and the Canadian Wheat Board’s Aug. 23 Pool Return Outlook has begun making its way upward too.
The August PRO took a big jump from the July PRO, with No. 1 CWRS with 13.5 percent protein projected to bring $7.02 per bu. at port. Durum is predicted to bring $8.74 per bu. for No. 1 CWAD with 13 percent protein.
Most years, Canadian crop conditions do not make world news. But when the first Statistics Canada wheat crop estimate was released last week, world markets reacted, sending wheat prices higher.
Statistics Canada found much less wheat on the Prairies than most had estimated, and that reignited fears that the world is running short of wheat.
So while Canadian farmers may be unhappy that they generally have less than stellar crops, they are getting some compensation from the international market, which has bid up the price in response.
That’s cold comfort to farmers like Rolfe, who sprayed multiple times to control the weeds, bugs and diseases that threatened his crop. He managed to get 38 bu. per acre, but that doesn’t offer a huge profit after all the extra inputs are factored in.
Sporadic rain has repeatedly stalled his harvest and threatened the quality of the crop.
But he allowed himself some satisfaction with the high world prices.
“It certainly puts a more positive light on it,” he said, upon returning to his house after being rained out again.
Dobson said he’s happy to see that most prairie grains are in a bull market, because that way farmers don’t have to pervert their rotations to chase the best paying crops.
“It’s more than just one grain that’s showing a return this year,” said Dobson.
Marit, who also suffered hail damage to many quarters, and who lives in an area that suffered the July heat wave, thinks some farmers, if not him, will be able to catch up financially this year.
“Unfortunately we don’t have the big bushels down here, but other parts of the province do, and good for them,” said Marit.
But Dobson worried that input inflation has reduced much of the profit and those input prices are unlikely to drop as far as grain prices do.
“Everything’s expensive. A lot of money’s on the line. It’s become a very high risk game to be in. You need those kinds of prices on good years because there’s going to be plenty of bad years,” said Dobson.
