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Canada's wheat export hopes dip, despite Australian and durum fillips

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Canada’s wheat exports will fall further than had been thought this season, undermined by a dip in sales to China, and despite rare shipments to Australia, and strong growth in durum volumes to Italy and Turkey.

 

The US Department of Agriculture’s Ottawa bureau pegged at 22.20m tonnes Canada’s all-wheat exports in 2019-20, a figure below the trailing five-year average.

 

Shipments at that level would represent a decline of some 2.2m tonnes year on year, and come in short of the 24.0m-tonne result that the US Department of Agriculture is officially forecasting for this season.

 

The bureau is also more downbeat than Canada’s own farm ministry, AAFC, which two weeks ago trimmed its own forecast for the country’s 2019-20 wheat exports by 200,000 tonnes to 23.40m tonnes.

 

Enhanced competition

The USDA bureau cited as behind its forecast “the current trade pace”, with “available” data showing that “exports of wheat and wheat products have declined 10% from the previous period”.

 

The downturn reflected “competition from large global supplies”, with the USDA currently seeing world wheat stocks rising 10.0m tonnes in 2019-20 to a record 288.1m tonnes, after a strong global harvest.

 

Data from the July-to-November period show that “eight of Canada’s top 12 wheat importers have reduced their purchases” year on year, including a reversal of sales to China, to where exports soared by 47% to 2.1m tonnes last season,

 

“Canada’s exports to China thus far into 2019-20 are down,” the bureau said, although adding that “this is simply a return to a more typical trade pace”.

 

Lowball quality

The bureau also – forecasting the crop at 32.00m tonnes, more than 1.3m tonnes below USDA and AAFC forecasts - noted the setbacks to Canada’s crop from “wet planting season, a dry growing season, and a wet and snowy harvest season”.

 

Thanks to the difficult harvesting season, 7% of spring wheat remains to be harvested, and what can be recovered after winter snows recede will go “to feed and waste”.

 

The difficult harvesting conditions have also left crop quality “less than the historic average”, with 74% of the Canadian western red spring wheat (CWRS)rated as being in the top two grades, and 50% of western durum.

 

“In addition to having a lower grade than the historic average, a significant amount of spring wheat was impacted by a low [Hagberg] falling number,” a factor which makes supplies “difficult to use” by mills.

 

‘First exports in 21 years’

Nonetheless, the lower grade, discounted wheat “may present opportunities in some of the more price-sensitive export markets”, the report said.

 

The bureau also highlighted an increase in shipments of spring wheat to Australia, where Manildra Group, the country’s largest wheat user, has brought a reported eight cargos for its Shoalhaven Starches plant in New South Wales which turns the grain into gluten and starch.

 

“Canada is exporting spring wheat to Australia for the first time in 21 years, due severe droughts that have devastated production in that country.”

 

Furthermore, exports to Italy of durum wheat, the type used in making pasta, “are experiencing a pace of growth not seen since 2015-16… due to a shortage of high-protein durum wheat in Italy”.

 

Durum shipments to Turkey - which soared six-fold last season to 310,473 tonnes to help supply the country’s growing pasta export industry - exceeded that amount in the first five months of 2019-20.

 

Nonetheless, “thus far into the trade year, it has not been enough to offset the declines from some of Canada’s biggest markets including the United States, China, and Indonesia”.

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