On Thursday, Cargill Inc. the global agricultural and food company based near Minneapolis released second-quarter results showing a whopping 41 per cent increase in profits.
Cargill operates in 67 countries — with sizable operations in many of them — so it’s not clear how much of those US$784 million profits (from just one three-month period) came from its Canadian operations.
But Cargill’s grain-handling, oilseed-processing and meat-processing operations spread across seven provinces and headquartered in Winnipeg did rate a line in the one-page news release: “Canadian performance stayed strong, bolstered by the country’s 2014 harvest, the carryover from 2013’s record crops and a steady export pull,” it said.
The same day the results were released the company’s vice-president, merchandising and transportation in Canada, John Buboltz, speaking at the Western Canadian Wheat Growers annual conference in Winnipeg, was full of optimism about the Canadian wheat export market.
Buboltz said that in the post-Canadian Wheat Board era, Canadian wheat growers are finding new customers in Asia, Africa and South America where, in each of those regions, sales of Canadian wheat in 2013 and 2014 surpassed the previous five-year averages.
He also said sales in some of Canada’s traditional customer regions such as the Middle East and western Europe, have declined — by 34 per cent and 24 per cent respectively. But Buboltz said the one-million-tonne decline in Canadian exports to Saudi Arabia and Iran in the last couple of years, for instance, was due to the fact Canadian wheat marketers were able to find better prices elsewhere.
“(Wheat purchases in) those countries are entirely government tenders, and they are only looking for the lowest prices,” he said.
The point is he believes that while the global export volume of wheat is on the rise, Canada’s exports are growing, its market share is holding fast and in many cases Canadian growers are taking market share from the U.S.
Not that he was trying to say Cargill or any of the other commercial players — such as Richardson Pioneer, Paterson or Viterra — are solely responsible, but he pointed out that with a little education and support, millers — such as those in Nigeria where Canadian wheat exports have doubled in the last two years — are willing to blend higher quality Canadian wheat with, say lower quality Russian wheat.
After the last couple of years of excitement and frustration in the western Canadian grain industry what with high prices and a bumper crop followed by lower prices and transportation bottlenecks, things are returning to calmer conditions.
“When you talk about wheat exports going forward, Canada is moving in the right direction,” he said.
Chuck Penner, president of LeftField Commodity Research based in Winnipeg, is bullish on Canadian wheat prices. He believes prices will benefit from a poor start to the winter wheat crop in Eastern Europe and the U.S. and fairly tight global supply from the 2014 summer crop.
“It will give the market a little boost,” he said.
Wheat acreage planted in Canada this year is expected to increase, and Penner said increases in corn and soybean acreage around the world has left wheat “a little neglected among the big three” global crops.
That’s not to say anyone is expecting a big increase in prices this year but there is a sense conditions for the western Canadian wheat farmer are really not that bad.
Blair Ruttner, executive director of the Western Canadian Wheat Growers Association, said improving diets and increasing food demands from around the world bode well for Canadian grain farmers.
“Prices have softened and they are not as robust as they were two to three years ago,” Ruttner said. “But there is still lots of optimism. The farmers recognize that, long term, the demand is going to be there. Prices are soft now because we have had very good crops around the world, but we’re not going to see bumper crops every year. There is a general sense we will see prices recover at some point down the road. Maybe not this year…. but the fundamentals are there.”
The global demand leads to long-term growth potential and Ruttner said, “We have the capacity to meet that demand.”
(Source – http://www.blackseagrain.net/novosti/grain-executives-bullish-on-canadian-wheat-exports)