* Farmers have sold only 20-35 pct 2012/13 wheat-CWB
* Crushers, exporters buying canola, but dropoff seen
By Rod Nickel
WINNIPEG, Manitoba, Nov 16 Canadian farmers are
keeping their bins of newly harvested wheat locked as they
cautiously ponder their first sales outside a marketing monopoly
since World War 2, while strong demand has pried much of this
year's disappointing canola crop off farms.
Farmers have only sold an estimated 20 to 35 percent of the
2012/13 harvest of 26.7 million tonnes for autumn or later
delivery, said Gord Flaten, vice-president of grain procurement
for CWB, the former monopoly marketer known as the Canadian
"I think there's a bit of uncertainty, and I think there is
a bullish market view as well, which is a big factor," Flaten
said. "If you believe prices are going to go higher, you're
going to hold off on committing."
A Canadian grain handling source estimated farmer wheat
commitments between 30 and 40 percent of the total crop.
For the first time in seven decades, Western Canadian
farmers can sell their wheat and barley for export or human
consumption to any buyer, not just through the Wheat Board.
Meanwhile, Minneapolis spring wheat futures are
trading nearly one quarter above their springtime levels, helped
by weather-related problems affecting crops in the Black Sea
region and U.S. winter wheat growing areas.
While wheat deliveries by farmers to country elevators are
up 9 percent to about 5.2 million tonnes as of Nov. 11 according
to the Canadian Grain Commission, some of those were leftover
sales from last year's crop, Flaten said. Higher deliveries also
reflect the second-biggest wheat crop since 1999, and favorable
Wheat, with its many grades and variables like protein
content, is considered by some to be a complex crop for farmers
to market. If farmers continue to delay sales commitments,
Flaten said a backlog may build up for the second half of the
August/July crop year, potentially overwhelming grain handlers
and pressuring prices.
"Because of the new marketing system, farmers didn't sell a
whole lot (of wheat) right off the combine," said Brett
Halstead, who farms near Nokomis, Saskatchewan and focused on
delivering canola earlier this autumn. "I think what's happening
now is more wheat's moving, because less was moving earlier in
Commercial stockpiles of wheat excluding durum - a category
that mainly includes spring wheat used for baking - are down
more than 8 percent according to the commission, as the
favorable autumn weather allowed for easy movement of wheat
through to the end user, Flaten said.
CANOLA CROP SMALLER, BUT FARMER DELIVERIES UP
Canola's supply story is different.
Farmers harvested a disappointing 13.4 million tonne crop of
canola this year, pushing prices higher.
Those premiums have allowed Canadian crushers to claw more
canola out of farmers' bins, with overall farmer deliveries up 3
percent on the year - despite the smaller harvest and tight
carry-over supplies from last year. Crushers are on a
record-brisk processing pace.
"You had a lot of commitments early from growers this fall,
both for the exporters and the crushers," said a Canadian
crushing source. "A lot of that stuff was done back in the
spring, early summer before the market and the growers really
started to see the crop deteriorate in July and August."
Canadian canola processing capacity has expanded
dramatically in recent years, and further expansion is being
planned by Cargill Ltd, Bunge Ltd and Archer
Daniels Midland Co.
"Crushers have to be in here (buying) every day - they're
just that big," said an ICE Futures Canada canola trader.
With strong demand, canola is moving quickly through
processing and export channels, slashing commercial canola
stocks 28 percent year over year to less than 1 million tonnes
as of Nov. 11, according to the Grain Commission.
But challenging conditions may slow down both the crushing
and export pace starting in January, the crushing source said.
Crush margins have weakened by almost half compared to last
year, due in part to high seed costs, and lower than usual oil
content has forced crushers to process more seed to squeeze out
the same volumes of oil.