Dear Editor:
On November 7, in “Loss of CWB Turns Back the Clock”, NFU board member Edward Sagan suggested, because of the removal of the Canadian Wheat Board, Canada wheat prices are like that of the early 1900s.
As a trained economist, respected grain markets analyst, and a member of a Saskatchewan family who’s grown wheat for over 100 years, I find Mr. Sagan’s arguments inaccurate and completely misleading.
Today, Mr. Sagan claims to be selling 11 per cent protein wheat for $4.23/bushel but the export price is $9.44 out of Vancouver.
First, Mr. Sagan doesn’t specify what movement period this sale is for and what type of wheat he’s selling. Because of the protein level, I’ll assume it’s Canadian Prairie Spring. Spot price for 11.5 per cent protein CPS wheat around Melville, where Mr. Sagan farms, is $4.50/bushel. According to the Saskatchewan Wheat Commission, the West Coast port price for CPS 11.5 per cent protein is $6.80, not $9.44 like Mr. Sagan suggests.
In fact, Mr. Sagan seems to be referring to the port price of Canadian Hard Red Spring Wheat, priced at $9.44 FOB Canadian West Coast ports. Further, that wheat is sold on a 13.5 per cent protein basis, not 11 per cent. Around Melville, the spot price for CWRS is closer to $6.90/bushel, or about 73 per cent of the port price, not the 40 per cent Mr. Sagan is claiming.
Finally, comparing today’s prices to those from six years ago is completely misleading.
In 2012, global wheat production was 659 million tonnes, or the lowest since record wheat prices were seen in 2008. Since 2012, global wheat production has grown by an average of three per cent a year, each of which has been a new record, including last year’s 754 million tonnes. Only this year, in 2017/18, has the pace slowed, with an estimated 751 million tonnes coming off wheat fields worldwide.
Further, global available wheat supplies by the end of 2017/18 will be more than 268 million tonnes. That’s a 51 per cent hike from Mr. Sagan’s benchmark year when, again, wheat prices were amongst the best seen in the past 50 years.
Mr. Sagan is correct in one thing: wheat production margins have declined substantially in the last six years. However, he should not be thanking federal or provincial conservative governments for this, but rather his fellow wheat farmers around the world.
Brennan Turner
President & CEO
FarmLead – North America’s Grain Marketplace
