The 2009-10 crop year which ended last week was eventually largely successful due to unseasonable temperatures experienced across the Prairies in September, and despite early forecasts that had predicted a less than successful season.
That was the message Allan Oberg, chair of the Canadian Wheat Board (CWB) delivered during the annual year-end crop report in Winnipeg last week.
“2009-10 was a challenging year, but it did have it’s successes. For most of the growing season it looked like the crop would be disastrous. Then September came, and it was the best September that farmer’s could have ever asked for.
Oberg, from Forestburg, AB, was recently anointed as the new chair of the CWB’s farmer-controlled board of directors in June, replacing former board chair and district 3 director Larry Hill, of Waldeck, SK. Oberg has been sitting as a farmer elected director since 2003.
“We had a lot of grain to market last year, and we successfully marketed that grain. In fact, total exports of farmer’s wheat, durum and barley, are the highest recorded in the past 10 years. Acceptance of farmer’s wheat was 100 per cent, and you can’t market much more than that. About 3.8 million tonnes of durum was accepted in a very oversupplied world, and this was well above our 10 year average.”
The CWB also pursued some innovative new ideas for the year, including a CWB-run testing and grading laboratory and the already-popular WeatherFarm online weather centre.
“In addition to the high volume of sales in 2009-10, it was also a year of beginnings,” said Oberg. “The CWB opened up its first laboratory at Innovation Place at the University of Saskatchewan in Saskatoon. This lab will enhance our ability to meet our testing and grading needs in a more cost effective manner. In December the CWB was a primary partner in the launching of WeatherFarm online weather centre, that is offered free of charge to all farmers in Western Canada. It includes mapping and modeling tools that farmers can use to help manage pests, increase efficiency of their crop production products, and generally improve their farm management practices.  To date, almost 9,000 farmers have subscribed to this innovative service.”
A cold, wet spring had put a damper on crop projections early on in the year, but the bad news turned out to be largely unfounded for many farmers across the west.
“We entered the last crop year in 2009 expecting the worst, for a crop that was under stress, and certainly one that was behind schedule. But for many farmers, and myself included, and last year turned out to be a fairly good one.   Prices were certainly down from the previous two years, but we did see high volume in sales, and it certainly exceeded everyone’s expectations from what we saw at the start of the crop year,” said Oberg.
Oberg is hoping for a repeat of the same this year, although the outlook for many areas is looking grim.
“As we enter the new crop year, farmers are again facing what looks like what could be a very tough year, with crop maturity being a very major issue out there.”
“ It’s certainly my hope for all farmers that somehow we have a repeat of last year’s harvest and in the end, we’ll wind up with a much better result that we all expected.”
CWB president and CEO Ian White began the nuts and bolts segment of the report by informing producers of the dollars the CWB is putting back into their pockets for the year.
“At the end of the crop year, the most important measure for farmers is the amount of money returned to producers. Although we marketed a strong volume of wheat, durum and barley this year, it certainly was not as good as the past two years of high prices. There’s been a significant supply response around the world to those high prices And this is in turn led to lower prices around the world. Although we haven’t done all the final accounting yet, we estimate that about $4.8 billion dollars will be returned to farmers this year. That’s more in line with returns we’ve seen earlier this decade. This marks the third highest total return in the past decade, and certainly more than farmers saw in 2006-07, before the run-up in prices.”
The CWB exported 18.8 million tonnes of wheat durum and barley during the crop year, the highest volume since 1999-2000, and up 400,000 tonnes from the previous year. Per bushel returns are significantly are down from last year due to lower prices on world markets.
“For spring wheat in the year just ending, we’re showing a per bushel return of $6.42 per bushel. Wheat prices have fallen significantly from the prior two years, but are still the fourth highest out of the past 10 years. Durum prices are also well down from the past two years. There were huge challenges for durum marketing in the past year. Not only did we have a large crop, but also did many of our major durum producers. North Africa and the U.S. in particular both enjoyed tremendous durum crops. Currently, we’re looking at returns of $5.47 per bushel, which is the lowest price we’ve seen since 2005-06. Returns for malting barley reached a record high in 2008-09. In 2009-10, like all commodities, they returned to levels seen earlier in the decade, with returns of $4.53 per bushel,” said White.
Looking towards this year’s crop, wheat futures are on the increase with uncertainty about the eventual outcome of the crop.
“When we look at the markets, for wheat values we can see that they have continued to come under pressure from last year due to the burdensome global supplies caused by the second highest world wheat crop on record,” said White. “Uncertainty about the size and quality of the 2010-11 wheat crop, particularly in Russia and areas around Russia have been a primary driver behind the recent strength in wheat futures values.”
The crop year saw a sizable crop delivered that bucked decade trends for quality and quantity, according to White.
“Western Canadian wheat production last year was very good. The 2009 wheat crop came in at 24.3 million tonnes. That’s down a bit from the 25.5 million tonnes we saw in 2008, which was the largest wheat crop since 1996. The 2009 crop was nonetheless a big one. It came in at 2.5 million tonnes over the five year average, and 2.4 million tonnes over the 10 year average. Given these production numbers, it took a successful marketing campaign for us to accept 100 per cent of the wheat. But in the end we marketed 4.1 million tonnes of durum. The 2009-10 crop was not only a big one, it was one of high quality. Seventy-eight per cent of the crop graded one or two. That’s up slightly from last year’s 75 per cent, and is well above the 10-year average of 66 per cent.”
White explained that from a marketing perspective, the 2009-10 crop year was very successful.
“For wheat, durum and barley, we had our highest exports in a decade last year. Total wheat exports far surpassed early projections, about two million more tonnes more than we had anticipated at this time last year. In terms of export performance, the last time exports were as high as this was in 1999-2000, when we exported 19.25 million tonnes. It’s up about two million tonnes over the previous year, and about 1.4 million tonnes over 2007-08. It’s also about 2.2 million tonnes over the 10-year average. This was significant given the aggressively competitive world markets, a market that had a particularly high supply of grain, especially wheat and durum.”
Large durum crops in North Africa and the U.S. significantly impacted the CWB’s marketing campaign.
“In terms of export performance for wheat, this translates into exports of 13.6 million tonnes, the highest in a decade. Acceptance for wheat was 100 per cent. Durum exports reached 3.8 million tonnes, that’s the highest total in three years. It’s a significant achievement, given the deep world-wide supplies and the very difficult international market conditions. The U.S. had a bumper crop, North Africa had a large crop, which delayed and reduced their import program. Malting barley, bulk exports were 1.2 million tonnes, down a bit from the record exports of 1.4 million tonnes in 2008-09. We had a very successful domestic marketing campaign, with a total out program of 15.7 million tonnes marketing of wheat, 4.1 million tonnes of durum, and 2.3 million tonnes of malting barley,” said White.
Only a very small percentage of the total Canadian crop is marketed domestically, added White.
“The North American markets are only a small part of the overall picture for farmers wheat. The wheat produced on the Prairies is marketed all over the world, and fully 86 per cent of wheat and 93 per cent of durum is marketed outside of Canada, and four-fifths is marketed outside of North America.”
Exports were increased in several key areas of the world.
“There were several success stories last year, and we saw changes to the lists of our major customers,” said White. “Iraq exports increased to 1.18 million tonnes. Bangladesh is a large country and an emerging market that we’ve been able to capitalize on. As personal incomes rise, wheat demand is also rising in Bangladesh, and our exports to that area are doubled. Our exports to Peru also nearly doubled, while wheat exports to China increased more than tenfold this last year, to 364,000 tonnes over the previous year. In July in Shanghai, we signed a memorandum of agreement for 500,000 tonnes basically for the next crop season. We also saw significant increases in wheat exports to Brazil.”
Predictably, sales of durum remained strong to Italy.
“Sales of durum to Italy were up strongly from the previous year, and exports remained strong to North Africa, despite the bumper domestic crop in that region. In addition, we capitalized on an opportunity to make sales for a non-traditional feed use to South Korea. For durum, we sell half, or a bit more than half, of the tradable volume in the world, so Canada is a very significant part of world trade for durum.”
Barley sales were also on the rise in many areas of the globe, according to White.
“For feed barley, Western Canadian domestic prices were considerably higher than offshore prices, so exports were limited. Our two main customers were Japan and Saudi Arabia. Malting barley exports continued to be fairly strong coming off a very successful year with China, where we saw a very significant increase, from about 350,000 tonnes to about 550,000 tonnes. This spring we signed a long-term agreement with China to guarantee sales of 150,000 tonnes for the next three years, which does provide a good base for marketing campaigns in China in those years. Exports to Columbia were also up strongly. Total export volumes reached 1.2 million tonnes, down a bit from last year’s record of 1.4 million tonnes.”