“Maybe this year they’ve just done a better job and it’s as simple as that.”
futures & options broker, union securities
world wheat exporters
2009/10 year ending May 31 – estimate. Source: Reuters from USDA data
e. U. 15.2%
U. s. 18.0%
Former soviet Union 28.0%
Canadian wheat exports are on track for the third-largest volumes of the past decade as competition from cheap European sales affects mainly U. S.-grown soft winter wheat, not the hard varieties Canada grows.
Canada has shipped nearly 8.7 million tonnes of wheat from August through January – the first six months of the 2009/10 crop year – according to Statistics Canada, putting it ahead of last year’s first-half exports.
That pace, which would end with 17.3 million tonnes for the year if sustained, is somewhat surprising given a glut of global wheat stocks and a strong Canadian dollar.
In contrast, U. S. wheat exports in the current marketing year ending May 31 are projected to sink to their lowest level since 1971 because of high U. S. prices and abundant global supplies of cheaper wheat.
French and Russian exporters sold wheat to several U. S. neighbours last month, helped by cheap ocean freight, bulging grain stocks, and their sharply discounted prices ahead of the spring harvest, traders and analysts said.
Much of the cheap European wheat is displacing similar-quality U. S. soft red winter wheat. said Bruce Burnett, director of
weather and market analysis for the Canadian Wheat Board.
“Right now we’re not seeing an impact on the products we market,” Burnett said. “Over the longer term, if they were to displace higher-quality milling wheat, that would be a concern.”
The wheat board has not seen European wheats appearing in Canada’s high-quality wheat markets such as Mexico, the Caribbean and Asia-Pacific region, Burnett said. The board’s 2009/10 export targets are unchanged from January at 17 million tonnes of all-wheat and 18.7 million tonnes of grain in total.
Higher year-to-date exports may also reflect a more aggressive marketing approach by the Wheat Board, said Ken Ball, a futures and options broker with Union Securities in Winnipeg.
“Maybe this year they’ve just done a better job and it’s as simple as that,” he said.
Canada is the world’s top exporter of spring wheat, used in baking, and durum wheat, used to make pasta.
Bountiful European supplies have reduced that market’s need for Canadian wheat, said one of the wheat board’s accredited exporters, who asked not to be identified.
In the first six months, shipments of wheat excluding durum are down 29 per cent to the United Kingdom and 32 per cent to Italy. Those drops are somewhat offset by Italy more than doubling its durum imports.
Overall Canadian wheat exports have started to slow, the exporter said. “We may not be as bad off as the Americans, but we’re still going to be down (at year-end),” the exporter explained.