Assuming “timely rains” continue and this fall’s harvest is free of frost, Canada’s largest grain company expects average yields in most of Western Canada’s grain-growing regions.
Viterra said in a release Wednesday that it expects “average grain marketings” in its 2009-10 crop year, based on the current crop conditions as well as a “significant” carryout of 2008-09 production.
“It is important to keep in mind that Western Canada is an extremely large and diverse producing region,” CEO Mayo Schmidt said. “While an area experiencing drought conditions has received significant media attention, overall crop prospects are in the normal range.”
Crop development got a boost from precipitation over most of the Prairie region this week, the Regina-based company said.
However, it noted, parts of west-central Saskatchewan and east-central Alberta remain expected to experience “significantly reduced” yields due to dry conditions.
Viterra said it “concurs” with recent industry estimates that predict production of the six major grains in Western Canada in the 44 million- to 46 million-tonne range, slightly below the 10-year average of 48 million.
However, the company said, on-farm carryout from the record crops of 2008 is expected to be seven million tonnes, up from three million last year.
“As a result, it is the company’s current expectation that deliveries into the western Canadian grain handling system for 2009-10 will be 30-31 million metric tonnes, consistent with the 10-year average.”
Viterra, in the same release, also confirmed its takeover of Australian grain handler ABB Grain “remains on track.” Viterra’s statement follows ABB’s downward revisions Tuesday to its 2009 earnings guidance.
“Our offer was not based on one year of earnings, but rather the long-term cycle of earnings beginning in 2010 and beyond,” Schmidt said. “The strategic rationale remains compelling. In addition, crop prospects in South Australia have been supported by good rainfall and growing conditions.”
Growing conditions, however, were one of the reasons for ABB’s revised guidance, as ABB said Tuesday that demand had slowed for ag inputs such as fertilizers, pesticides and other ag merchandise due to drought.
As well, ABB now expects to post lower sales of malting barley into Asia. The current economic crunch has eaten into the Asian growth rate for beer consumption, ABB said.
Overall, ABB said, it has revised its expected 2009 net profit after tax (NPAT) to a range of A$43 million to $53 million, down from its May 19 guidance of A$53 million to $63 million.