Canadian wheat exports might be heading toward the biggest volume in six years following a bountiful harvest in Canada and sharply lower output from rival shipper Australia.
A projected 26 per cent decline in wheat production in Australia, the world's second-biggest wheat exporter last year, ahead of Russia and Canada, will give Canadian supplies a larger foothold in Southeast Asia, a federal agriculture analyst said.
The United States was the No. 1 wheat exporter last year.
Agriculture and Agri-Food Canada (AAFC) predicts that Canada will export 18.75 million tonnes of all wheat in the current 2012-13 crop year, the highest level since 2006-07. Much of that volume would have to move in the second half of the crop marketing year, which runs from Aug. 1 through July 31.
In the first five months through December, Canada has exported nearly 7.6 million tonnes of all wheat, up a modest six per cent year over year, according to Canadian Grain Commission data. The all-wheat category includes spring wheat, durum and winter wheat.
Traditional buyers of Canadian supplies such as Indonesia, Japan, Philippines, South Korea, Malaysia and Sri Lanka have bought more Canadian wheat year over year.
"All these companies buy from Australia, and one reason they're buying from Canada this year, probably the main reason, is Australia had much lower production than last year," said Stan Skrypetz, a wheat analyst with AAFC's market analysis group in Winnipeg. "So they have to come in someplace else."
Australia's production estimate for 2012-13 edged higher on Tuesday to 22.077 million tonnes, but that would be about 26 per cent lower than the previous year.
Smaller crops in Australia and Russia, due to adverse weather, have also left India poised to export dramatically more wheat this year, but still less than half of Canada's expected volumes.
The brisk Canadian export pace coincides with the first year of an open market in Western Canada, after the federal government passed a law that ended the Canadian Wheat Board's marketing monopoly on Aug. 1.
It is unclear whether the marketing change -- which allows farmers to sell to any buyer, not just through the entity now known as CWB -- has contributed to the big export program, but it hasn't hurt, said John Duvenaud, who publishes the Wild Oats Grain Market Advisory.
"The trade can go out and all they have to do is outbid every other grain company and get all the wheat they want. I'm sure it's quite liberating for them."
Indonesia imported 433,500 tonnes of Canadian wheat (excluding durum) in the first five months, up 24 per cent, while Sri Lanka purchased 42 per cent more at 295,100 tonnes and South Korea more than tripled its imports, according to the Grain Commission.
China, normally not a large importer, is also buying high-protein Canadian wheat this year to blend with its domestic supplies, Skrypetz said. It imported 274,100 tonnes of Canadian wheat through December.
The U.S. is buying more Canadian wheat, especially hard red winter wheat for feed markets, he said. The southern U.S. Plains' winter wheat crop is under stress from drought, raising fears that production will be poor.
"The hard red winter wheat crop in the U.S., I think it's safe to say will be worse than last year," Skrypetz said. "But how bad, we still do not know."
-- Rod Nickel is a Reuters correspondent based in Winnipeg.