Where to store all that wheat?

Wednesday, August 24, 2016

by SUSAN MANN

Ontario’s farm animals could be chowing down on more wheat than corn in their feed this year.

Ontario’s wheat production is slated to be almost three million tonnes this year, up 68 per cent compared to 2015, according to Statistics Canada’s July principal field crops production report. It was released Aug. 23.

The huge jump in wheat production means more Ontario wheat could show up in feed than corn as production of that crop is projected to drop this year. The dry weather in many regions across Ontario this growing season is cutting into farmers’ expectations for the corn crop’s size.

Todd Austin, Grain Farmers of Ontario marketing manager, says feed mills will probably substitute the loss of corn for the extra wheat being produced, “especially when you’re looking at potentially lower yields for corn.” The domestic market and food mills, regular buyers of Ontario wheat, will also take portions of the wheat crop, he adds.

The Statistics Canada report says the two factors contributing to Ontario’s wheat production increase are harvested acres and yields. The harvested area in Ontario was about one million acres, up 42 per cent compared to 2015. The average yield was anticipated to a hit record level of 89 bushels per acre, up 17 per cent from the previous year.

Austin says the wheat yields overall were “much better than expected.”

Statistics Canada notes corn production in Ontario is slated to fall 11 per cent this year, compared to last year, to eight million tonnes. The decline is due to a projected decrease in average yields this year to 154 bushels per acre, a 10 per cent drop from the 171 bushels per acre in 2015.

The harvested acres in Ontario are projected to decline by about one per cent.

Austin notes overseas interest in Ontario wheat as well. The province has good yields and good quality, and other countries such as France and Germany have a poor quantity and quality of wheat this year. That situation “is helping to increase interest in the Ontario crop.”

He doesn’t foresee any immediate problems for Ontario’s farmers having to sell such a big wheat crop since “it’s the first crop off and things are moving.” During corn and soybean harvest, however, “the taps may turn off for wheat.”

Some farmers may end up storing their wheat until next spring, and Austin predicts some demand throughout the year for wheat.

He says the Chicago Board of Trade futures for grain and oilseed commodity prices “have been relatively weak, mainly due to expectations of big crops in the United States, especially corn. The USDA’s (United States Department of Agriculture’s) last report pegged corn at around the 175 bushels per acre range.”

Austin says the potentially big corn crop in the United States has tempered corn futures, “which then does the same thing to the wheat futures.”

In Canada, there has been an increase in demand for wheat to use in feed and some more demand at terminals and elevators, leading to an improvement in basis levels since early spring. Additionally, Canada’s relatively weak dollar compared to the American currency “is helping our Canadian price,” Austin notes.

Perth County farmer Mark Brock, chair of Grain Farmers of Ontario, says “there’s a lot of wheat in the system and we’re going to have to try to get it used up.”

The effects of the crop size will hit farmers in a number of ways because “it will put pressure on prices and it will take up some space. We’ll feel some effects just on storage when we go into the soybean and corn harvest,” he says, noting “the world seems to be awash with wheat right now so it’s a little trying to move wheat for a reasonable price.”

Grain handlers were struggling to handle the influx of a lot of wheat over harvest, Brock says. “Now that we’re through harvest, the bids are probably going to improve a bit over the winter time.”

As for the wheat crop itself, Brock says on his farm near Staffa he had the best average wheat yields ever at more than 100 bushels per acre. His average yield comparison is based on the farm’s crop insurance records going back to 1973.

Brock says he grew 350 acres of wheat this year, up 300 per cent compared to 2015. Good planting conditions in the fall enabled Brock to get the crop in the ground early. A mild winter coupled with good spring weather contributed to the stellar crop.

“All the stars aligned – there were good yields and good quality,” he says.

In other crops listed in the Statistics Canada report:

• Soybean production in Ontario is anticipated to decline by 15 per cent this year compared to 2015, to about three million tonnes. The harvested area is also slated to go down by about seven per cent to three million acres. The average yield is projected to drop to 42 bushels per acre this year compared to 46 bushels per acre in 2015.
• Nationally, wheat production is projected to reach 31 million tonnes this year, up 11 per cent compared to last year. Corn production at 12 million tonnes is anticipated to decline nine per cent this year compared to last year. Soybean production is also projected to be down this year to six million tonnes, a drop of seven per cent compared to 2015.
• Lentil production nationally is projected to hit a record high of three million tonnes this year, an increase of 36 per cent over 2015.
• Canola production across Canada is slated to be 17 million tonnes, a drop of one per cent compared to 2015.
• Barley and oat production across Canada is projected to be nine million tonnes, a seven per cent increase over 2015.

Statistics Canada says it did the July farm survey by contacting about 13,000 Canadian farmers from July 21 to Aug. 4. The farmers had to report their estimated crop area, yield and production of grains, oilseeds and specialty crops. BF