Canada's wheat exports to hit four-year low, as quality loss bites

Crop losses amid a "damp and snowy harvest" in Canada's Prairies have begun to take a toll on expectations for the country's exports, viewed by US officials as hitting a four-year low
The US Department of Agriculture's Toronto bureau forecast Canada's wheats exports in 2016-17 coming in at 21.0m tonnes – 1.0m tonnes below the USDA's official forecast.
The downgrade reflects the dent– in both quality and quantity terms – to Canada's wheat prospects from wet weather which has prevented harvesting, leaving crops to deteriorate in the field.
And it represents one of the first attempts to quantify the impact of the damage which, with Canada in the main a producer of high quality spring wheat, has added to ideas of a world harvest this year which, while large, is weak in higher quality supplies.
Indeed, Canada's woes have been seen as fuelling the outperformance in Minneapolis spring wheat futures, which – December basis - raised their premium over Chicago soft red winter wheat futures from less than $0.30 a bushel in June to a peak of $1.34 ¾ a bushel last month.
Slow harvest
Wet weather conditions have been noted as stalling harvesting in particular in Alberta and Saskatchewan, where ag officials last week last week said that harvest of all crops, from barley to wheat, was 82% complete – 17 points behind the five-year average pace..
The spring wheat harvest was 81% complete, and that of durum, the type of wheat used in making pasta, 77% finished.
The delay has led to concerns that yields might now match earlier expectations and that quality could be adversely affected by moisture and frost damage, with much wheat likely to be downgraded to use only in livestock feed rather than for bread-making.
'Quality downgrading'
"Despite strong yields throughout most of the country, a damp and snowy harvest in parts of Alberta and Saskatchewan is making for quality downgrades, which could see more wheat heading to feedlots than foreign destinations," the USDA bureau said.
"Moisture and frost damage are expected to cause quality downgrading in wheat destined for exports, relegating it to feed use."
As a result, the bureau has upgraded to 4.3m tonnes the amount of wheat used in feed in 2016-17, above the 4.0m tonnes forecast by the USDA.
The average protein level for all grades of spring wheat for the 2015-16 crop is reported at 13.7%, down 0.4 points year on year, according to the Canadian Grain Commission.
Production up
The USDA bureau predicted the country's wheat production at 29.2m tonnes, below the USDA's official figures of 31.5m tonnes, although still a strong figure, and representing a three-year high.
"Improved yields are expected to bolster production in 2016-17, even with fewer planted acres," the USDA said.
Meanwhile, early prospects for Canada's, relatively small, winter wheat crop for 2017 harvest look generally look positive, with planting in eastern Canada making "good progress," according to the International Grains Council.
"Conditions were generally dry, but with occasional showers," the IGC said.
In the Prairies, which includes the provinces of Saskatchewan, Alberta and Manitoba, "wet soils aided crops", the council added, although the region is better known for its spring wheat.

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