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Strong world wheat demand expected

A robust export program could be in the cards for Canadian farmers as the European Union faces serious quality problems.
Price premiums for high-quality wheat are widening in the European Union, and good demand for North American spring wheat is expected in that market.

WESTERN PRODUCER — North America’s spring wheat could be in high demand this year due to crop quality problems overseas.

“There is going to be a good market for solid CWRS (Canadian Western red spring) 13, 14 and even 15 (percent protein),” said Neil Townsend, chief analyst with GrainFox.

He has heard about serious quality problems in the European Union, including Poland, which produces the highest protein wheat in the region.

“Apparently, they’re injecting artificial gluten protein into their wheat when they’re making flour,” said Townsend.

“They have to bulk it up (because) it’s so low this year.”

There are similar reports out of Russia, where most of the winter wheat harvest is complete.

“It was basically a full percentage point of protein, by their measurement, below what would be considered normal,” said Townsend.

Germany and Ukraine are also dealing with low protein.

That’s what makes him think Canada will have a repeat of its robust 2022-23 wheat export program.

Agriculture Canada estimated 20 million tonnes of wheat was exported last crop year, which would be 12 percent above the previous five-year average and the second highest program since the turn of the century.

It is forecasting 19.8 million tonnes of exports in 2023-24.

Annachiara Saguatii, analyst with Areté, an agrifood intelligence company, said abundant late spring rainfall caused quality problems with both common and durum wheat in the EU this year.

Weather deteriorated further starting in late July in Germany, Poland, Denmark and northern France, where heavy rains disrupted harvesting activity.

France recently issued its first quality report, which shows that 25 percent of the crop is premium quality versus the average of 33 percent.

There has also been drought in Spain and flooding in Italy that have caused damage.

“In summary, partly because of drought and partly because of excessive rainfall, there are indeed problems with wheat quality, particularly in terms of specific weight, but also a lack of high protein wheat,” Saguatii said in an email.

Price premiums for high-quality wheat are widening in the EU.

She said there should be good demand for North American spring wheat in that market.

Between July 1 and Aug. 28, the EU increased its wheat purchases from Canada by 54 percent compared to the same period one year ago.

It also increased its imports from Ukraine, Moldova, Serbia and the United Kingdom. The strengthening euro against the U.S. dollar might help spur European imports from around the world.

AHDB Cereals & Oilseeds reports that winter wheat protein levels look encouraging in Great Britain, but there are issues with the falling number and specific weight.

SovEcon analyst Andrey Sizov said there was too much rain in Russia and Ukraine in June, just before harvest.

“That typically means that protein content will be lower,” he said.

He heard from growers that they applied less fertilizer this spring due to cost concerns, which will likely contribute to low protein levels.

Sizov estimates 77 percent of the wheat in Russia and Ukraine is of milling quality compared to 80 percent last year and 87 percent two years ago, which is about average.

However, he noted Russia has record high carry-in stocks and much of that is high-quality wheat. That will partially offset this year’s low-quality crop.

He believed there should be strong demand for Canadian spring wheat this year, especially in the United States because of its poor hard red winter wheat crop.

Sizov also anticipated good demand for Canadian durum from Italy because of that country’s production problems.

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