The Canadian Wheat Board (CWB) will increase exports of Prairie farmers’ wheat this year and is on track for record malting barley sales, despite the challenge in the world market environment and record-large global crop production.
In its annual Grain Marketing Report, mailed to Prairie farmers this week, the CWB has announced an export target for 2008-2009 of 16 million tonnes (MT) of wheat, up 1.4 MT from last year. The export target for barley is 1.6 MT, with at least 1.4 MT expected to consist of malting barley. The previous record for bulk malting barley exports was 1.3 MT in 1997-1998.
“Prices remain relatively high from a historical perspective, although they have dropped from the record highs we saw last year,” said Chief Operating Officer, Ward Weisensel in the Grain Marketing Report now posted on www.cwb.ca.
“The CWB has taken advantage of increased rail and lake freight capacity to move increased volumes of this year’s large prairie crop during the busy post-harvest period.”
Weisensel noted there are plenty of challenges in these times of global economic turmoil. He said that in addition to a large worldwide crop and extreme price volatility, tight credit and currency fluctuations are major factors. “Grain buyers are taking a cautious approach to purchases in the face of economic uncertainty.”
Western Canadian farmers produced a large crop in 2008, with production of the six major grains at 54.3 MT, up 25% from the previous year. Global wheat production increased 12% in 2008-2009 from the previous year’s record level.
The size of the crop and this year’s global marketing environment led to Series A acceptance levels being set at 80% of Canada Western Red Spring Wheat and 60% of Durum.
“In a market environment characterized by cautious hand-to-mouth purchasing, aggressive pricing by competitors, and record world wheat production, the CWB has adopted a staged approach to acceptance of wheat,” Weisensel said, adding that more grain will be accepted on subsequent contract series’, based on progress in the overall sales program.
He reminded farmers that the Series B deadline for wheat sign-up is January 31.
The CWB projects farmers in Saskatchewan will receive about $246 per tonne for top-quality spring wheat, $297 for durum wheat; and $253 for malting barley. An updated Pool Return Outlook was released on January 22.
Overall, the 2008 harvest was above-average in quality. A cool start to the season gave way to above-normal temperatures in August. Dry and warm conditions in the fall allowed for rapid harvest completion that helped preserve crop quality.
The Grain Marketing Report also notes that the “wild ride” of the Canadian dollar once again emphasized the importance of CWB hedging strategies that are designed to reduce volatility in pool returns, and take advantage of opportunities when they arrive.
Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada’s biggest exporters, the Winnipeg-based organization sells grain to over 70 countries and returns all sales revenue, less marketing costs, to farmers.
