Commodity News Service Canada — Before the 2012/13crop year, when the Canadian Wheat Board was stripped of its monopoly to market western Canadian wheat, some Asian companies purchased large amounts from Canada.
But since the single desk has ended, there have been challenges with purchasing Canadian wheat, causing some companies to reduce the amount they are buying, Derek Sliworsky of Prima Group, Agriway PTE Ltd. told the Cereals 2014 conference in Winnipeg. Sliworsky was also previously the manager of the CWB’s Japan office.
Prima Group owns milling facilities in China, Sri Lanka and Singapore. At one point the Sri Lanka mill purchased all of its wheat for the year from Canada. But, all three locations have seen a decline in Canadian wheat imports since the end of the single-desk on August 1, 2012, Sliworsky said.
One of the biggest challenges in buying wheat from Canada has been shipping times, as some ships they ordered since 2012 were waiting at ports for up to 40 to 50 days. It’s a problem for buyers because it’s almost impossible for them to predict when the cargoes of Canadian wheat will arrive.
Sliworsky added that it’s very difficult for a buyer to not know when they will get their wheat, as it makes them nervous about possibly running out of stock.
One shipment of a special type of wheat for a specific flour product arrived two months too late from Canada, and they were out of stock for a few weeks, he said.
Prima Group has also faced problems with deferring cargoes, noting that it was easy to do with the Canadian Wheat Board in charge. But, sellers now are quoting premiums of two to four dollars per tonne to defer the shipments, even if they give two to three months notice, Sliworsky said.
His company has also experienced shipment weight issues, and greater protein variability within shipments, which is problematic as it can cause buyers to end up with wheat that they cannot use.
Sliworsky’s company also found peas in a container of wheat, he said, adding, “they don’t know what is going on in the (Canadian) system.”
These issues aren’t found with every container, but it’s not happening with shipments from any other country.
Canadian wheat will likely face further challenges on the export market going forward, including competition from other countries, such as the United States and Australia, who are coming to buyers with new varieties to try. That used to be common practice when the Canadian Wheat Board was in power, but it no longer happens in the new open market, according to Sliworsky.
Another issue is a lack of sufficient competition in the Canadian marketplace, making it harder for buyers to get the product they want for a good price. Sliworsky said a buyer may only get two or three offers from Canadian sellers, and if many of them are sold out when they need the product, then “they have to start switching the way they are buying.”
But, it’s not all bad for Canadian wheat, he said, as it is still highly regarded and valued in many Asian markets. The grade variety and integrity is still there, buyers have resources such as Canadian International Grain Institute and the Canadian Grain Commission, and the wheat is cleaner than from some other countries.
An added bonus, he said, is that vessels aren’t fumigated, as Canada has a natural competitive advantage of having temperatures below 35 Celicus, which isn’t the case with Australia and most of the U.S.