MARKETS
THE WESTERN PRODUCER | WWW.PRODUCER.COM | JULY 30, 2015
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MARKET INFORMATION
New service expected to improve transparency Market analysts say Alberta Wheat Commission’s website will add to an already large amount of industry information BY SEAN PRATT SASKATOON NEWSROOM
Grain growers will have vastly improved market transparency when selling the 2015 crop. The Alberta Wheat Commission is putting the finishing touches on a website at www.pdqinfo.ca that will provide farmers with regional average daily cash prices for all the major crops. “We’re hoping to be able to make some announcement closer to harvest,” said general manager Tom Steve. The commission and Farmers Advanced Risk Management Co., a grain marketing consulting firm that is leading the project, initiated discussions with grain companies this spring about gaining access to their daily elevator bids. “We have had very fruitful discussions with all of the major grain companies and some of the smaller ones as well,” said Steve. The only thing holding up the launch are technical issues that need to be ironed out. Steve said the website will contain average prices for all the major crops in eight zones across Western Canada. “We’re trying to reflect an average regional price, but we’re not sharing any proprietary information,” he said. “We think it’s a major step forward to have access to that timely information.” Chuck Penner, analyst with LeftField Commodity Research, said grain pricing and movement information is already more transparent than many farmers believe. Agriculture Canada publishes a weekly report containing a lot of pricing information, while provincial agriculture departments, ICE Futures Canada and grain companies and stand-alone inland terminals also publish prices daily or weekly. “This is market transparency,” he told the Agricultural Producers Association of Saskatchewan’s recent mid-term convention. “Not great, but it’s market transparency.”
Readily available market information helps farmers make informed marketing decisions. | However, only a couple of farmers raised their hands when he asked the audience how many make use of those resources. Growers can also find out basis prices if they know where to look. ICE publishes a canola basis comparing Vancouver port prices to futures prices, and Penner compiles his own elevator basis charts for Western Canada and North Dakota based on publicly available information from grain companies. “In my mind, that’s transparency,” he said. There is also port-to-futures basis information for No. 1, 13 percent Canada Western Amber Durum at the West Coast and at St. Lawrence, and Penner said he is able to compare those levels against the average Canadian prairie basis. As well, the Canadian Grain Com-
mission publishes a wealth of information on grain logistics every week. “That’s helpful information,” said Penner. “Some of it is more useful than others.” The Ag Transport Coalition also provides timely information detailing railway performance on a weekly basis. One thing that is missing is reporting of export sales. In the United States, exporters are required to provide weekly updates about what crops they shipped and where they went. The information is compiled and published by the U.S. Department of Agriculture’s Foreign Agricultural Service. “We don’t have that. That’s one of the things we need,” he said. Penner also laments the loss of the weekly vessel line-up report, which disappeared when the Canadian
ROBERT ARNASON PHOTO
Ports Clearance Association closed its grain transportation business in 2012. He used to be able to look at the report and see, for example, that six vessels were waiting to be loaded with 240,000 tonnes of peas. Through CGC reports he could see how much was in port terminals and country elevators and assess whether grain companies would need to adjust pea prices to attract quick deliveries from farmers. It was a good barometer of where prices were heading. “That is one of my big beefs because that’s (how) I would give some of my best advice,” he said. Steve said the commission will attempt to fill those information voids in future versions of its website. “Definitely we’re looking at all of those issues, and I would concur with (Penner’s) assessment,” he said. Penner said growers need to start
using the available price and logistics tools if they want to maintain the market transparency that exists today. He has had conversations with Agriculture Canada officials who have threatened to stop posting weekly prices because of poor use of the service. “If nobody uses it, of course they will disappear,” said Penner. Growers should also put pressure on grain companies to list more pricing information on their websites. Some don’t publish prices at all. “It doesn’t help to complain to your local guy,” he said. “You really have to go up the food chain to talk to the guys as high up as you possibly can.” Penner would also like farmers to request more information from the grain commission. “I know the guys who work in that stats department. They would love to do more for you guys. They would absolutely love to,” he said. The problem is a lack of resources, but farmers clamouring for information would be hard to ignore. Growers can also lobby members of Parliament for more market transparency, but they need to be specific about what they want. “It’s one of these things like world peace. Yeah, that’s a great idea, but what do you mean by that? What parts are missing? What don’t we have now that we would like to have?” He said grain companies, railways and groups such as Quorum Corp. have lots of information that they keep under wraps. “The great unwashed like me don’t get access to that,” said Penner. “That needs to be made public as well too on a very timely basis.” He also warned farmers against fudging yield and acreage numbers when Statistics Canada comes calling because the information it compiles is also a form of market transparency. “If you give them good answers, you have better market transparency. Just saying.” sean.pratt@producer.com
AMERICAN HARVEST
Large spring wheat crop expected in U.S. BY SEAN PRATT SASKATOON NEWSROOM
American farmers are getting ready to harvest a bumper spring wheat crop. The U.S. Department of Agriculture is forecasting 15.6 million tonnes of production, which would be the largest crop since 1996-97, despite the fifth smallest planted area in 20 years. It is also forecasting a sizable 2.06 million tonne durum crop, which is almost identical to the previous 10-year average. That is impressive, considering growers planted 1.65 million acres with durum, which is up from last year but well below the 10-year average of 2.2 million acres. Erica Olson, marketing specialist with the North Dakota Wheat Commission, said farmers got in their fields early for the first time in five
years, and weather conditions have been close to ideal. “We’ve had fairly good moisture but not too much,” she said. It was wet in June and July so producers had to be vigilant about spraying their crops, but they have done a good job and disease pressure is low. The USDA is forecasting average spring wheat yields of 48 bushels per acre for North Dakota, which would be a record. “I have talked to some producers and when they hear that number, they think it’s too low. They think it will be over 50,” said Olson. It would likely mean a revision in the 15.6 million tonne production estimate because North Dakota grows half of the spring wheat produced in the United States. “I think there is definitely some upside potential to that number,” she said.
However, dry conditions in parts of South Dakota and Montana could partially offset the strong crop yields in North Dakota and Minnesota. The USDA is forecasting an average durum yield of 36 bu. per acre for North Dakota, which again is responsible for about half of the country’s durum acres. Olson has heard no feedback from growers about that estimate, so she thinks it must be fairly accurate. The U.S. spring wheat crop was rated 70 percent good to excellent as of the week ending July 19, which is the same condition it was in a year ago. North Dakota’s durum crop was rated 86 percent good to excellent. Early season durum sales have been brisk for 2015-16 and the USDA expects continued strong demand for the crop because of poor production prospects in Canada and parts of the European Union.
The USDA is forecasting 1.09 million tonnes of U.S. durum exports, up from the five-year average of 903,000 tonnes. Spring wheat sales have been slow, but the pace is expected to pick up because of a poor Canadian crop and a low protein U.S. hard red winter wheat crop, which also experienced significant disease damage. The USDA is forecasting 8.85 million tonnes of spring wheat exports, 22 percent above the five-year average. Olson expects harvest to start during the first week of August, which is about two to three weeks ahead of the last few years, so spring wheat and durum should be hitting the market early. It is too early to speculate on quality, but big yields usually mean low protein levels. sean.pratt@producer.com
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