Lack of wheat drives up prices from ethanol plants

Prices for feed wheat in Western Canada having seen a significant jump throughout the first half of 2011, thanks in large part to strong demand from the ethanol sector.

In the middle of November, Husky Energy’s plants at Minnedosa, Man. and Lloydminster, Sask. were paying producers $4.25 and $4.55 per bushel respectively for feed wheat deliveries. Now, farmers are receiving $6.80 at Minnedosa and $6 at Lloydminster for their feed wheat.

Jake Davidson, executive manager of Winter Cereals Canada, said the plant in Minnedosa used a heavy ration of corn throughout the winter, and are now looking find some wheat.

However, he added, wheat supplies are tight right now, and hard to find.

“I don’t know how much there is to sell. A number of Hutterite colonies I’ve talked to have had to go well into Saskatchewan to be able to buy any wheat,” Davidson said. “Whether it’s hard, soft, spring, winter, red or what have you, wheat supplies are small.”

With the price of corn remaining very strong, Davidson said it was more affordable for ethanol plants to look for wheat.

Davidson said another reason why ethanol companies are so willing to pay big money for wheat is because they fear there could be troubles with the crop currently in the ground.

“I haven’t seen nearly as much winter wheat out of the ground as I usually do at this time of year,” he said. “The stuff that is up looks pretty good, but things are behind schedule.”

Officials at the Husky plant at Minnedosa were contacted, but would not offer any comment.

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