Both men agree that perhaps a potential stumbling block to fulfilling the new global opportunities for their U.S. growers may be right here at home if transporting the product from the interior elevators to the ports continues to be an issue.
“An overbooked and underserviced transportation system would limit our ability to supply our customers,” says Peterson. “Nobody wants to add demurrage fees on top of high prices and freight rates because you can’t deliver the crop to the port.”
True enough. Nothing could be more maddening than paying upward of $101/tonne for ocean freight rates and knowing that Panamax vessel is sitting in port with the meter running waiting for wheat to arrive at the port. Rising fuel costs and demand for vessels and container shipping have driven freight rates higher than ever before.
A look at 2008
Supply and logistics issues aside, when asked to offer a sneak preview of 2008, both Skarke and Peterson remain optimistic for continued success and growth for their respective industries.
Coming off a year where the wheat industry witnessed its first “fundamental change in pricing” since the early 80s, Peterson says fostering the U.S. wheat industry’s reputation as the world’s most reliable supplier of milling wheat should keep demand strong in 2008 and beyond.
“We’ve achieved a new, higher trading range for our product that is good for growers,” he explains. “We have one of the few truly open wheat markets in the world with no limits on access except supply and the industry is coming together to address that in the long-term.
“One way to help make wheat more competitive with other crops is through technology, which has helped other crops tremendously,” Peterson says. “Clearly, the world needs more wheat and we want to do what we can to ensure there is an ample supply well into the future.”
For Skarke success in 2008 is simple. Keep the newly found EU customer base engaged and committed to being a consistent buyer in 2008 and beyond.
Provisions of NAFTA will also allow Mexico to purchase more U.S. corn so opportunities to tap into markets in the Orient and North Africa offer great promise.
In large part, the 2007 corn crop has reshaped these two markets and created a host of new opportunities and challenges to watch for in 2008.
In our upcoming February/March issue, we take a similar look at the barley, soybean and other oilseeds markets, in addition to taking a look at the cottonseed markets.