The complete picture will be painted over the next few weeks, but buyers are bracing themselves for variable quality in this year’s wheat crop in Western Canada.
“The big challenge is the ongoing rainfall events,” notes Neil Townsend, market analyst with FarmLink Marketing Solutions, in the interview below. “Other quality factors, not just protein, but disease factors are playing right at the top of people’s minds. We really don’t know what the end quality will be…there’s a lot of wait-and-see going on right now.”
Winter wheat harvest is underway on the Canadian prairies, with spring wheat just around the corner. Meanwhile, Ontario’s winter wheat harvest is wrapping up, likely setting a new provincial yield record. And in the US, winter wheat harvest is 94 percent complete, while almost a third of the spring wheat crop is off, according to the USDA’s latest crop progress report, issued Monday.
American growers have also seen above average yields, coinciding with lower protein levels. As of August 5th, sampling done by Plains Grains Inc., a nonprofit wheat marketing organization for US Hard Red Winter wheat, showed a preliminary protein average for the HRW crop of 11.1 percent, versus 12.3 percent in 2015.
A similar story is expected to unfold in Western Canada, says Townsend.
“We’re looking at a big yield, with lower than average protein. Also factoring into that are the varieties of wheat that are gaining traction, and some of those tend to give big yields and slightly smaller protein levels.”
Combined with the wet conditions in some areas, he expects prices to firm for both protein and other grading factors.
Globally, the wheat market has seen support lately from poor weather reducing yield and quality prospects in France. But on the flip side, Russia and Ukraine have seen better-than-expected wheat production, Townsend points out.
This is all in the context of large — and growing — wheat supplies, as global production is forecast to reach 735 million tons, according to the International Grains Council, just a million tons below the all-time record in 2015-16. As a result, the IGC predicts carryover stocks will grow to a new high of 228 million tons.
Neil Townsend— who recently left his post as director of market research at G3 Canada and previously, the Canadian Wheat Board — discusses wheat market prospects, in terms of quantity, protein and disease, as #harvest16 begins in Western Canada: