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CWB sees good crop, good quality, good prices ahead

Western Canadian farmers were beginning to harvest a bumper, high-quality crop at a time of strong world prices that are expected to remain that way during the 2012-13 crop year, a CWB official said last week.

Widespread drought in the American Corn Belt and the wheat-growing areas of Russia, Ukraine and Kazakhstan, is positive for grain prices, Neil Townsend, the CWB’s director of market research said at a crop year-end news conference in Winnipeg July 31. He’s forecasting a 10-million- to 12-million-tonne shortfall in world wheat supplies, which will see buyers come to North America.

“Generally when the world has to shop in the U.S. prices tend to go up and Canada will benefit from that as well,” he said.

“As I always say price is the blunt instrument of demand destruction,” Townsend said. “So price has to destroy some demand offshore right now and in the United States and I’m not sure the price, even at $8 corn right now, is where it needs to be. So for the next four or five months… until we see significant results from South America I think the prices are going to be in a fairly significant high level and perhaps in an upward level where we haven’t seen the peaks yet.”

The CWB was forecasting American corn yields to average 160 bushels an acre this fall, but has dropped its estimate to 124.5. U.S. corn production could be down 100 million tonnes this crop year from earlier projections — double all of Western Canada’s average production of all crops, Townsend said.

That means less corn will go into ethanol production. Livestock herds will be culled because of high feed costs and prices for other feed grains will increase — good news if Canadian grain quality declines before the end of harvest due to poor weather.

Drought was also a concern when western Canadian farmers were planting this spring following a dry fall and winter, said CWB weather and crops specialist Bruce Burnett. However, most parts of the West have received above-normal precipitation, with some areas being too wet. Overall, western crops are looking good, he said. Areas south of Winnipeg and in the Peace River district could’ve used more rain, he added.

The CWB is forecasting more tonnes of wheat and barley will be produced this year and almost the same volume of durum, compared to 2011, Burnett said.

Wheat production has been pegged at 19.96 million tonnes, which would also exceed the five-year average.

Durum and barley production is estimated at 4.46 and 8.04 million tonnes.

In its last crop year (2011-12) with a monopoly over the sale of western wheat and barley destined for export or domestic human consumption the CWB will pay farmers an estimated $6.3 billion based on exports of 18.1 million tonnes of wheat, 3.6 million tonnes of durum and 1.1 million tonnes of barley (745,000 tonnes of malting barley and 390,000 tonnes of feed.)

The wheat board also sold 2.15 million, 225,000 and 1.0 million tonnes of wheat, durum and malting barley domestically.

The highest net return to farmers from the CWB of $7.8 billion was set in 2007-08.

In 2011 75 per cent of Canada Western Red Spring wheat was in the top two grades, compared to 65 per cent on average.

Sixty-eight per cent of the Canada Western Amber durum wheat was in the top two grades versus an average of 57 per cent.

The CWB’s top customers in 2011-12 were as follows:

Wheat: Canada, 2.15 million tonnes, Mexico, 1.1 million tonnes, Japan, 1.0 million tonnes, Iraq, 1.0 million tonnes, Colombia, 853,000 tonnes.

Durum: Algeria, 716,000 tonnes, United States, 506,000 tonnes, Italy, 500,000 tonnes, Morocco, 414,000 tonnes, Venezuela, 347,000 tonnes.

Malting barley: Canada, 1.0 million tonnes, China, 362,000 tonnes, United States, 194,000 tonnes, Mexico, 21,000 tonnes, South Africa, 57,000 tonnes.

Feed barley: Japan, 236,000 tonnes, Saudi Arabia, 118,000 tonnes, United States, 36,000 tonnes.

About the author


Allan Dawson

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.



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