High protein levels might not necessarily mean high prices for wheat growers in Western Canada, as many markets don’t pay a premium for protein, speakers said here Monday at the annual Wild Oats Grainworld conference, highlighting the shifting market realities now that the Canadian Wheat Board no longer retains its single desk for selling the crop.
"Wheat is not (just) wheat, it’s very complex," said Lawrence Yakielashek, president of Alfred C. Toepfer (Canada) Ltd. in Winnipeg.
Wheat used to create noodles or flatbread needs completely different characteristics than that used for bread or pastry, he noted.
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When factoring out projected domestic usage of about 8.6 million tonnes and a carryout of 4.4 million, Canada should be left with about 15 million tonnes of wheat to export in 2013-14, said Yakielashek.
Of that total, only six million to seven million will be going to markets that pay a premium for high protein, such as Japan, with the remainder facing off against stiff competition in the wider international market.
Under the former single-desk system the focus was on high protein, but the premiums paid by the former Canadian Wheat Board for high-protein Canada Western red spring (CWRS) were a distortion of the actual market, said Yakielashek.
The actual spread between high- and low-quality wheat can be very narrow, he added. World wheat buyers don’t necessarily want high protein, and he said Canada’s production needs to better reflect that.
Protein is a commodity just like everything else, which means prices will come under pressure when the world has too much high-protein wheat, added Doug Hilderman, vice-president of western grain trading in Winnipeg with Ontario grain merchant NorAg Resources.
Hilderman also foresaw more vertical integration between the various stops along the value chain under the new marketing system, in which end-users better communicate with growers over what to plant.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
