Canada reforms to spur wheat price volatility

The liberalisation of Canadian grain sales looks set to boost wheat price volatility, lift inventories held by food companies, and spur the emergence of a new grade of malting barley.

The Canadian Wheat Board will in August lose its monopoly over sales of wheat, durum and barley grown in the Prairies, responsible for the great majority of the country's harvests of the grains a reform introduced to allow growers choice of where to sell.

However, the revamp will have a series of extra knock-on effects, including extra price volatility, as the array of grain merchants which will succeed the single-desk regime compete for supplies.

"There will likely be more volatility as private traders will want to have things delivered at the same times," US farm officials said.

"The Canadian Wheat Board, as sole marketer, was very good at smoothing out the demand spikes."

'Element of supply risk'

Other potential consequences include a boost by Canadian grain users to their inventories, given the elimination of a supplier, in the CWB, which offered the "advantage" to consumers "of security of supply".

"With this advantage being eliminated the domestic food industry is likely to maintain higher stocks to counter this element of supply risk," the US Department of Agriculture officials in Ottawa said.

Meanwhile, the reforms likely mean Canadian wheat being delivered to US elevators, and more being exported through US ports.

And, in barley, they may catalyse the emergence of a lower grade of malting barley, termed "fair average quality", which is "not top end but can be used to make beer".

"This potential third class of barley [in addition to feed and malting] is expected to meet the increasing demand for lower-quality from China and other countries," the officials said in a report.

Wheat vs canola

The comments came as the officials estimated the Canadian wheat crop recovering to a three-year high of 26.1m tonnes this year, a figure in line with the estimate from the country's own farm ministry (AAFC).

"Less-than-average snowfall over the winter means that producers will have drier seeding conditions than they have had the past two years," the USDA report said.

The recovery might have proved even bigger were it not for the growing popularity of canola, the rapeseed variant of which AAFC expects record sowings of 8.25m hectares.

"A potential early spring may favour canola over wheat as canola is one of the first crops that farmers are able to get into the ground, as canola tends to have a higher tolerance for temperature variations that may result from an early planting," the briefing said.

"Wheat acres are facing strong competition from oilseed crops, particularly canola, as the economics strongly favour canola over wheat at this time."

drew drew lady gaga marry the night video lady gaga marry the night video pac 12 championship game pac 12 championship game bobby valentine