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This year’s back-up plan could work out nicely

Wheat acres in Alberta jumped this year but the move appears to be well timed

With the shine off pulses and disease issues constraining canola acres, wheat has become the go-to alternative for Alberta farmers this year.

StatsCan estimates 6.27 million acres of spring wheat were planted in the province this year — 405,000 more acres than last year and the most since 2013. Add in durum and winter wheat, and the total — just north of 7.5 million acres — is the highest in a decade.

It’s a similar story in Saskatchewan and Manitoba, which raises the question of where all that extra production will find a home.

The situation is actually looking pretty good, said provincial crop analyst Neil Blue.

“There have been five consecutive years that we’ve seen world production outstrip demand, which is of course resulting in increasing world stocks of wheat,” said Blue. “But that looks like it might finally change this year.”

The International Grains Council is projecting world wheat production will sink to a five-year low. Global wheat prices have been rising as dry conditions are expected to curb production in Europe and the Black Sea region as well as Australia, following years of bumper crops.

“In the wheat market we are probably somewhere moving from surplus to tighter supplies,” said Bill Lapp, president of U.S.-based Advanced Economic Solutions.

Global wheat production has hit record highs for the past five years, with 2017-18 output climbing to 757.92 million tonnes. But this year the output is expected to decline to 736.26 million tonnes, according to U.S. Department of Agriculture data.

“There are some potential crop deficits which are impending or that have happened,” said Blue. “It’s throwing a bit of chance into the marketplace where we’ve been quite negative for a while.”

The demand side also seems favourable at the moment.

Despite much-publicized issues with rail transport this winter, Canadian wheat exports are up this year.

“We have shipped more wheat out than a year ago,” noted Blue.

Wheat exports during the past crop year (ending July 31) hit 16.23 million tonnes, which was up from the 14.67 million from a year earlier (but in line with the five-year average of 16.06 million).

Canada’s top three markets — Indonesia, Japan, and the U.S. — increased purchases during the first 11 months of the just-ended crop year, all buying about 1.5 million tonnes. They were joined in the million-tonne club by Bangladesh (1.15 million tonnes) and Colombia (1.1 million tonnes) with both Peru and China just under that mark. The latter more than tripled its purchases.

“China has been a big market for our wheat this year,” said Blue.

But it’s difficult to anticipate who will be buying wheat in the coming year, and how much they will be willing to pay, said Geoff Backman, manager of business development and markets with the Alberta Wheat Commission.

Prices change from year to year, depending on what the crop is like, and what its attributes are, he said.

“Even protein can have different values, depending on the availability in the world,” he said. “Last year, protein was quite valuable and depending on how this year goes, we might see the value of protein change.”

Still, Backman expects the trend of rising exports to Asia to continue.

“If you look at the export markets, you’ll see that this trade, especially with the trade issues, we’re going to see more going into China than our previous years,” he said. “We’ve been seeing more and more of our crop going into the Asian market and it’s unlikely that we’ll see that change in the short time.”

There is also opportunity in Africa and the Middle East, but other competitors often get the upper hand in that part of the world, said Backman.

“We’ve been seeing purchases in that region go to closer markets,” he said. “There’s price savings in purchasing from the Black Sea market.”

The durum market has been affected by Italy’s protectionist measures, and so more durum has been heading to the United States, he added.

Alberta growers also seeded more durum this year (1.18 million acres, according to StatsCan) but wheat production in Canada — whether durum or spring — doesn’t have a big impact in the global marketplace, said Jonathon Driedger, senior market analyst with FarmLink Marketing Solutions in Winnipeg.

Jonathon Driedger.
photo: Supplied

“What happens outside our borders will have a bigger impact,” said Driedger. “In that context, based on what we know and see today, knowing that we have a lot of the Northern Hemisphere harvest ahead of us, I would say that we’re reasonably optimistic about the outlook.”

— With files from Reuters

About the author

Reporter

Alexis Kienlen lives in Edmonton and has been writing for Alberta Farmer since 2008. Originally from Saskatoon, she has also published two collections of poetry and a biography about a Sikh civil rights activist. Her freelance work has appeared in numerous publications across Canada.

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