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As anyone feeling the effects of Father Time will tell you, 25 years brings a lot of changes—some for the better, others not so much. The same can be said for international wheat markets over the past few decades, which have similarly moved forward in some areas and backward in others. In the process, they’ve presented Canadian farmers and exporters with their fair share of challenges, opportunities and perhaps a glimpse of what lies ahead.

One of the most telling changes has been the makeup of international wheat markets: who’s buying, who’s selling and who can be described as a major player.

“At one time, the Soviet Union was our top customer,” said Cam Dahl, president of Cereals Canada. “Over the years, they have been replaced by countries like Bangladesh— which buys over a million tonnes of wheat from Canada every year—and Indonesia, as well as the regions of West Africa, Latin America and South Asia.”

Canada’s main competitors have also changed. For example, Dahl pointed to the countries of the former Soviet Union that have gone from being some of our largest customers to some of the largest wheat exporters in the world.

“To me, the most glaring statistic is the percentage of global wheat exports attributed to Canada and the United States,” said Brennan Turner, president and CEO of FarmLead, which bills itself as “North America’s Grain Marketplace.”

That number dropped from 79 per cent in the 1970s to about 27 per cent today.

“It shows you how more evolved producers have changed their game in approaching international trade and supporting domestic production,” said Turner. “As well, Russia and the Black Sea countries are leading wheat exporters now, something that seemed far-fetched back in the ’80s. That trend of new players in old markets is not going to subside.”

Just as the players have changed, so too have the numbers.

According to Caalen Covey, former business development and markets manager at the Alberta Wheat Commission, “over the last several years there has been staggering growth in the worldwide demand for wheat.”

That growth in demand has triggered a corresponding rise in production, to the point where we now have a global wheat glut.

“Australia had a massive crop recently, as did the United States over the last couple of years,” said Covey. “Canada and the Black Sea countries have been producing a lot as well, moving supply well ahead of demand and driving prices down somewhat.”

That doesn’t concern Covey, however, who expects the situation to turn around quickly. “The U.S. is already switching out of winter wheat this year because of the carryover from last year,” he said.

Like many countries, Canada has boosted its quantity of wheat production, but equally important is the improvement in quality.

“The impact of massive investment in Canadian logistical systems in recent years is considerable,” said Dahl. “It starts with how we store grain on the farm, where aeration is now the rule rather than the exception and grain bins feature electronic monitoring.”

From Dahl’s perspective, the difference between elevator systems 30 years ago and what’s on the farm today is dramatic, as are the benefits of that evolution. “Now we can prevent mycotoxin infections and maintain the right moisture level,” said Dahl. “The large investment in infrastructure begins at the farm and includes inland facilities as well as upgrades to West Coast capacity. Consequently, over the last 10 years we’ve significantly improved our ability to deliver the right product to the right place at the right time.”

In the past quarter-century, advances in technology have left their mark on every sector of the economy, and wheat markets are no different. This has paved the way for what some call the “commodity casino,” where price information and news flow continuously, margins disappear in minutes and risk management is critical.

“I think many farmers are used to the old system under the wheat board, so they don’t manage risk the way they should,” said Covey.

Because they’re used to delivering as soon as possible, Covey said many producers aren’t taking advantage of things like forward pricing or timing sales, which would allow them to avoid selling everything in the fall when prices may not be at their peak.

Fortunately for farmers and exporters, the proliferation of new technology has cut both ways.

“The commission has a new information service called PDQ that provides cash grain market price information and related statistical data,” said Covey. “It enables farmers in Western Canada to view regional grain prices and gain a better understanding of what’s happening in their area.”

The explosion of technology in this century has led to other opportunities, such as the development of cutting-edge Canada Prairie Spring Red (CPSR) wheat varieties for western Canadian farmers. In co-operation with Cereals Canada, Covey has created a marketing plan to take advantage of the new varieties.

“We want to ensure that when producers raise varieties, there is a viable market for them,” said Covey. “Working with exporters, we are trying to align production and increase the number of acres of CPSR so farmers can derive the maximum benefit from yield improvements.”

Although much has changed over the last quarter of a century, Turner said there has been one critical constant. “Canada remains one of the largest wheat producers in the world at close to 30 million tonnes per year,” he said. “Going forward, trade missions will be more vital than ever to stress the quality of our wheat. Our history as a consistent supplier of good-quality grain is a big reason that we’re still a top exporter.”

Still, the Canadian wheat industry can’t afford to be complacent.

“We must continue to focus on what markets demand,” said Dahl. “What worked 20 years ago will not work now or 20 years from now. We need to maintain a resilient industry that can adapt to change.”


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