Don’t Cherry-Pick Data for Canada Wheat Prices

Canada wheat prices are the worst in the past 100 years.

And it’s because of the removal of the Canadian Wheat Board.

That was the argument, at least, of National Farmers Union board member Edward Sagan who wrote an op-ed last week that got published in I don’t know how many agricultural community newspapers. [1]

As a trained economist, respected grain markets analyst, and a member of a Saskatchewan family who’s grown wheat for over 100 years, I dispute this.

In fact, Mr. Sagan’s arguments are inaccurate and misleading.

Low Western Canada Wheat Prices?

Today, Mr. Sagan claims to be selling 11% protein wheat for $4.23 per bushel. Further, the export price for the same wheat is $9.44 per bushel out of Vancouver and $11.80 out of Thunder Bay.

First, Mr. Sagan doesn’t specify what movement period this sale is for and what type of wheat is he actually selling?

Because of the protein level, I’ll assume it’s Canadian Prairie Spring (CPS) wheat.

The spot price for 11.5% protein CPS wheat around Melville, Saskatchewan, where Mr. Sagan farms, is $4.50 per bushel.

According to the Saskatchewan Wheat Development Commission, the West Coast port price for that same CPS, 11.5% protein wheat is $6.80, not $9.44 like Mr. Sagan suggests. [2]

In fact, Mr. Sagan seems to be referring to the West Coast port price of Canadian Hard Red Spring Wheat, valued at the exact same $9.44.

That wheat is sold on a 13.5% protein basis though. Not 11%, like Mr. Sagan’s wheat.

Digging deeper, around Melville, the spot price for CWRS wheat is closer to $6.90, or about 73% of the port price.

This is not the 40% Mr. Sagan is claiming that Canadian farmers are receiving.

Who’s to Blame for Canada Wheat Prices?

Comparing today’s prices to those from six years ago is completely misleading.

In 2012, global wheat production was 659 million tonnes.

This was the lowest output numbers since record wheat prices were seen in 2008. As such, wheat prices were pretty good in 2012!

Since 2012 though, global wheat production has grown by an average of 3% a year, each of which has been a new record, including last year’s 754 million tonnes. Only this year, in 2017/18, has the pace slowed, with an estimated 751 million tonnes coming off wheat fields worldwide.

Further, global available wheat supplies by the end of 2017/18 will be more than 268 million tonnes.

Using Mr. Sagan’s benchmark year from six years ago, that’s a 51% hike! Again, keep in mind, that wheat prices were amongst the best levels seen in the past 50 years.

Mr. Sagan is correct in one thing: wheat production margins for Canadian farmers have declined substantially in the last six years.

However, he should not be thanking federal or provincial conservative governments for this, but rather his fellow wheat farmers around the world.

Are we seeing low Canada wheat prices because there’s no Canadian Wheat Board?

Which Wheat Farmers Though?

Digging deeper into this, Canada’s largest wheat competitors globally are in Australia, Argentina, the United States, the European Union, and the Black Sea.

Doing some “Sagan Math” and comparing a data point from six years ago to today, Russian wheat production has climbed 120% to 83 million tonnes this year. In Ukraine, wheat production is up 68% from 2012 to 2017.

Canada wheat production is actually down almost 1%.

Doing some more data cherry-picking and directly comparing 2012 to 2017, Russian wheat exports have increased 187%. Not far behind is Ukraine, who saw its wheat exports increase 130% over the same timeframe!

Unfortunately, Canadian wheat exports have increased only 11%.

Even more, the combination of Russian and Ukrainian wheat exports accounted for a little more than 13% of total global wheat exports in 2012/13. That year, Canada wheat was competitive enough to earn 13.7% of global wheat exports.

This year, in 2017/18, the Russian-Ukrainian ownership percentage will have doubled to more than 27%. Comparably, less than 12% of total wheat exports worldwide will be stamped with Made in Canada.

Below is a breakdown of Sagan’s math, comparing six years ago to today. The only difference is that I’ve added a currency variable that might help you understand why other country’s wheat might have been more attractive price-wise.

Currency and global wheat market production has led to lower wheat prices in Canada

Are Canada Wheat Prices Not Competitive?

I agree that there was some rushed decision-making in the removal of the Canadian Wheat Board.

I also wish that we had better wheat prices in Canada.

However, as a grain price risk-manager, I play the game in front of me, not the one I’m hoping for.

Further, as a player in the global wheat game, a Canadian farmer needs to look past our own zone and recognize that global wheat trade dynamics are important.

More simply, when you’re selling wheat to the local elevator, it’s not very apparent but you’re actually selling to a global market. And that global market has more to do with the decline of Canada wheat prices, not the CWB.

In fact, one of the biggest factors in this global wheat market is currency.

Since January 2012, the Russian Ruble has declined against the US Dollar by nearly 50%. The Ukrainian Hryvnia has dropped literally 70%.

Moreover, he Australian Dollar has lost 26% while the Euro has declined just 10% against the US Dollar.

The Canadian Loonie?

Down 19% over the same timeframe.

While this decline has helped Canada increased its wheat exports, from a price standpoint, Russian and Ukraine wheat is, factually, the cheapest in the world.

You can read more here about how impressive Russian wheat producers and exporters have been.

Also consider reading how Ukrainian wheat farmers have done similar things.

Looking For Better Wheat Prices?

I’m unashamed to admit that with the removal of the Canadian Wheat Board, FarmLead was born.

I’m also unashamed to admit that we’ve helped 100s of Canadian farmers find better prices for their wheat. In fact, we’ve helped 1,000s of farmers find better prices for many different types of grain.

Compared to the local bid, farmers are finding, on average, 6% more for their grain when using the FarmLead Marketplace. And it’s free to do so!

And all types of wheat farmers are finding better deals:

– CPS wheat
– Hard red spring wheat
– Durum wheat
– Pro-National Farmers Union
– Anti-Canadian Wheat Board
– Pro-Roughriders
– Anti-CFL
– Canadian
– American
– etc.

It doesn’t matter what you stand for, or what type of wheat you’re growing on the FarmLead Marketplace.

What matters in this global agricultural game is that you have an easy and transparent way to find the best price possible for your wheat (or any other grain for that matter).

To reiterate my conclusion though, Mr. Sagan should not blame the provincial and federal conservative governments in Canada as to why Canada wheat prices are lower compared to six years ago.

It should be the global wheat farmer. And the non-cherry-picked data continues to suggest it’s those in Russia and Ukraine.

A second conclusion is that this blame game is ironic: Many Canada wheat farmers can trace their roots back to these regions.

A third, and final conclusion: Go Riders.

About the Author
Brennan Turner

Brennan Turner is the CEO of, North America’s Grain Marketplace. He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead. In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow. He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!). Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.

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