Louis Dreyfus official says grain farmers are putting more money in their pockets in the post-CWB era because ‘the market is doing a very efficient job of pricing grain’
Canada’s doing just fine without the Canadian Wheat Board, according to the president of Louis Dreyfus Commodities.
“I’m going to suggest we’ve done very well,” Brant Randles told attendees at the recent International Livestock Congress.
He noted in 2007-08 prices for wheat futures were higher than in November 2012, but the farmer was still getting the same amount.
“The net back to the grower is much bigger — the basis has collapsed and I would suggest the market is doing a very efficient job of pricing grain,” Randles said.
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Without the wheat board, there’s essentially a continental wheat market and exports to the U.S. are at a near-record pace, he said. With the transition to an open market last year, many were trying to get rid of their inventory in preparation, Randles said, and the market is even tighter now with robust prices.
“It’s happening the world over,” he said. “The farmer is incredibly wealthy and he’s not delivering anything. So stocks are depleted, we have vessels waiting in Prince Rupert waiting for cargo.”
Growers are holding off on sales to see how crops develop over the next few weeks and the prospects are generally good, despite a late start to seeding, Randles said.
Across the border, the drought is done, which should bring corn prices down significantly but wheat may be a different story as Chinese buying in the U.S. is strong, he added. Although Russian wheat is cheaper, China appears to be favouring the U.S. because it is a more reliable supplier, he said. If anything goes wrong with the wheat crop in any of the world’s major exporters, “wheat prices will be on fire,” he predicted.
While canola isn’t going to hit the record acres of 2012, Randles said a better yield is predicted this year. Overall, he predicted continued market volatility until farmers have a better idea of what the crop looks like this year. After high corn prices and the decimation of last year’s hay crop putting more pressure on cattle margins, Randles predicted better circumstances for cattlemen this year.
“We would expect cattle margins to improve significantly as we realize these lower corn prices,” Randles said.
