Millers and bakers worry as drought wilts spring wheat in North America

WINNIPEG, Manitoba / FARGO, ND, Aug. 5 (Reuters) – Millers and bakers deplete their wheat reserves and pay more for spring wheat used in baking, as drought cuts harvests on Canadian prairies and plains from the northern United States which produce more than half of the world’s supply.

U.S. and Canadian farmers brace for significantly weaker spring wheat harvest due to driest conditions in decades as inclement weather damages crops across the hemisphere, from burning cherries in the Pacific Northwest American iced sugar cane in Brazil.

While global wheat stocks are large, drought is primarily affecting the protein-rich spring wheat crop on which millers such as Archer Daniels Midland Co (ADM.N) and bakers including Grupo Bimbo (BIMBOA.MX) s ‘press to produce texture and moisture. in the baked goods that consumers expect.

Importers from Britain to China have to pay for limited North American harvests or look to other suppliers like Australia and Russia.

Minneapolis spring wheat futures are trading near nine-year highs, leaving Camas Country Mill in Eugene, Oregon, ready to pay more, owner Tom Hunton said. He plans to pass his higher costs on to customers of the plant’s bakery.

Camas Country will use last year’s wheat stocks to supplement this year’s supplies to produce flour. But Hunton is worried about the drought that will continue into the next year.

“It’s not sustainable for anyone,” he said.

In Canada, bread prices could increase by as much as 6.5% by the end of the year, said Sylvain Charlebois, director of the Agri-Food Analysis Laboratory at Dalhousie University in Halifax, Nova Scotia. .

U.S. prices are harder to predict, as flour prices fell earlier this year as closures eased and fewer people were cooking at home, he said.

FAST DESCENT

Canada’s spring wheat crop is expected to be between 16 and 20 million tonnes, well above last year’s 25.8 million, said Bruce Burnett, director of markets and weather information at MarketsFarm. According to provincial governments, only 16% of spring wheat in Saskatchewan and 21.6% in Alberta is in good or excellent condition.

According to the United States Department of Agriculture (USDA), the spring wheat harvest in the United States is expected to drop 41% from a year ago to reach the lowest production in 33 years.

The USDA estimated on Monday that only 10% of the country’s spring wheat crop was in good or excellent condition, down from 73% a year ago and the lowest score for this point in the season since the drought. from 1988.

In Montana, where the USDA estimated that 42% of spring wheat was in very bad condition and 43% in bad condition, growers are buying sales contracts signed earlier in the season with silos because they will not have no wheat to deliver.

“I canceled more contracts last week than I wrote. If they don’t have a crop, they have no choice,” said a commercial grain buyer who refused to be named because he is not authorized to speak to the media.

IMPORTERS ADJUST

China, which normally buys modest amounts of North American spring wheat to make high-quality bread and baked goods, will likely buy more from other suppliers such as Australia, a trader based in Australia said. China with an international trading house.

Russia could fill part of North America’s deficit on the world market. Southern Russia, the country’s main wheat-producing region, produces wheat with more protein than a year ago, said Dmitry Rylko, director of the Moscow-based consultancy IKAR.

Spring wheat from Russia and Kazakhstan, however, does not have the same important cooking characteristics, such as gluten strength, as American hard red spring wheat and western red spring wheat. Canadian, said Mike Spier of US Wheat Associates, a trade group that promotes wheat overseas.

The drought will force bakers to change the way they work flour, adding more water to compensate for the drought and making other adjustments to avoid producing more crispy buns than usual, said Glenn Wilde, owner of Harvest Bakery in Winnipeg, Manitoba.

British baker Warburtons buys half of his wheat in Canada, about 200,000 tonnes per year, grown by farmers to company specifications. The company will pay more this year to make sure it acquires enough Canadian spring wheat, said Adam Dyck, director of the Canadian Warburtons program, adding that many grains may be too shriveled to be made into flour.

Dyck said he’s used to seeing pockets of drought on the Prairies, but nothing so prevalent.

“It’s pretty unique for this generation,” he said.

Reporting by Rod Nickel in Winnipeg and Karl Plume in Fargo, North Dakota; additional reporting by Julie Ingwersen in Chicago; Sybille by La Hamaide in Paris, Polina Devitt in Moscow, Hallie Gu in Beijing, Pavel Polityuk in Kiev Editing by Marguerita Choy

Our standards: Thomson Reuters Trust Principles.


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