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Small Crop Offers Good Return

Last year was one of the toughest years farmers can remember, plagued with drowned-out seeding, weather-induced quality demotions, and sluggish rail service.

But the prices for the 2010 crop made it worth the hassle.

“At the end of the day we will see one of the highest overall returns in history, including the second-highest wheat prices ever,” wheat board (CWB) chair Allen Oberg said during the CWB’s annual crop-year-end news conference in Winnipeg Aug. 26.

The final tally is pending, but the CWB estimates it earned $5.8 billion for farmers during the crop year that ended July 31, “the fourth-highest CWB revenue in history, smaller only than 2007-08, 2008-09… and just slightly below that of 1996-97,” CWB president and CEO Ian White said.

The CWB’s July Pool Return Outlook (PRO) puts the farmer return for No. 1 Canada Western Red Spring (CWRS) wheat at $7.75 a bushel and the dominant grade of No. 3 at $6.60, he said.

A record 28,000 Producer Payment Options contracts were struck to price five million tonnes of grain.

“In a nutshell the 2010 growing season saw record rainfall levels that left millions of unseeded acres leaving a small crop with one of the lowest-quality profiles that we’ve ever faced,” White said. “This was frustrating for farmers and posed difficult marketing challenges, made worse by grain movement issues that stalled farmer deliveries and hampered the supply chain for most of the year.”

Record rainfall saw 10.5 million acres go unseeded resulting in the fewest wheat acres planted since 1970.

That was followed by a cool summer, which delayed crop maturity. That, along with poor harvest weather, resulted in just 38 per cent of CWRS wheat making the top two grades, compared to 78 per cent in 2009 and an average of 68 per cent.

“Only four other years since 1970 had a lower overall spring wheat quality profile,” White said.

TOP GRADES

Only 21 per cent of the Canadian Western Amber Durum wheat made the top two grades versus 78 per cent in 2009 and the average of 57 per cent.

Barley quality suffered too resulting in a shortage of malting barley for domestic and export customers.

Although malting barley was short, the CWB exported more feed barley last crop year, including 424,000 and 298,000 tonnes to Japan and Saudi Arabia, because of strong prices. In recent years, exports have declined because of stronger domestic prices.

All wheat production totalled 21.2 million tonnes, down from 24.3 million in 2009 and below the average of 22.4 million.

CWB exports totalled 15.8 million tonnes – 11.2 of wheat, 3.4 of durum and 1.2 million of barley.

“This was one of the lowest export volumes this decade, down almost three million tonnes from the previous year and about two million tonnes below the five-year average,” White said.

The CWB focused on trying to satisfy its quality-conscious buyers while finding markets for unusually large lower-quality grains, he said.

POOR SERVICE

The job was harder because of CP rail’s poor service, White added. The railway couldn’t supply the cars when needed. Avalanches in the winter and flooding this spring compounded the problems.

“Throughout most of the year we faced enormous difficulty in getting the right deliveries moved to port, at the right time for our customers,” he said.

By March 2011 shipping on CP lines was two months behind. However, the CWB has signed a service-level agreement with CP and service has improved, White said.

Because of the grain backlog, 22 per cent of Prairie elevators – mostly on CP lines in southern Alberta – are still taking old-crop-year grain deliveries.

“We are now expecting this backlog to be resolved before the end of September,” White said.

The current crop year, which began Aug. 1, is shaping up to be better than the last. It started with another wet spring and six million unseeded acres mostly in southeast Saskatchewan and western Manitoba. Since then it has been too cool on the western Prairies and too hot in the east, White said. Manitoba has had more than 40 days where temperatures exceeded 25 C, while Alberta has had fewer than 15, which is why harvest is lower there.

There’s also been localized flooding in the Peace River area.

QUALITY

Still, farmers are harvesting a bigger wheat crop than last year.

“The big question is quality,” White said. “Things look good at the present time, but we still have to have three to four weeks of good frost-free weather and minimal rainfall to preserve the quality of the crop.

“At this stage we’re keeping our fingers crossed for production quality for the rest of the harvest and seems prices will remain firm for much of the rest of the season.”

The latest PRO estimates top-grade wheat will earn farmers $7.15 a bushel.

Higher prices are being capped by the forecast world wheat production will reach 670 million tonnes this year, the third highest on record. [email protected]

———

Inanutshellthe2010 growingseasonsaw recordrainfalllevels thatleftmillionsof unseededacresleaving asmallcropwith oneofthelowest-quality profilesthat we’veeverfaced.”

– IAN WHI TE

About the author

Reporter

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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