Demand for Canadian wheat might improve in the aftermath of the surprising discovery of a genetically modified trait in a U.S. wheat field, but market analysts worry the incident might raise fears among buyers about North American wheat rather than just U.S. wheat.

U.S. wheat exports threatened

The appearance of Roundup Ready wheat volunteers in an Oregon field could temporarily send more business Canada’s way but it will likely cause more harm than good, says an industry analyst.

“In the short-run it might mean that countries like Japan and the European Union will demand some more testing for American wheat and maybe move a little bit of interest up to Canada,” said Neil Townsend, director of CWB Market Research.

The Japanese Ministry of Agriculture, Food and Fisheries on May 30 temporarily suspended imports of U.S. soft white wheat, filling its needs with alternatives from Australia, Canada and France.

Wheat buyers in South Korea also temporarily suspended purchases of U.S. soft white wheat.

Taiwan is reviewing its buying practices and the European Commission will be checking all shipments of wheat for Roundup Ready varieties once a test is available in a couple of weeks.

That was the early importer response to the discovery of an unapproved GM wheat variety in an 80-acre field in Oregon.

Townsend said Canadian wheat may be more in demand in the aftermath of the surprising discovery of a GM trait that was supposedly destroyed in 2005. However, he is not rubbing his hands together with glee just yet.

“It’s not desirable to have this happen for anybody,” he said.

Townsend worries the contamination incident is going to “stoke some fear” amongst buyers about North American wheat rather than just U.S. wheat.

“What I worry about is you damn the whole area just from one isolated incident and even Canada could get caught up in that with the continuous border,” he said.

Buyers know Monsanto was field-testing Roundup Ready wheat in Canada at the same time they were studying the crop south of the border and that could be weighing on their minds.

Errol Anderson, analyst with ProMarket Wire, said wheat markets shrugged off the incident and he didn’t anticipate much further response.

“My feeling is that it will probably run its course. I kind of doubt that Canada will get much benefit out of it,” he said.

Anderson said there are more questions than answers about the Roundup Ready wheat volunteers right now.

It is conceivable that the incident could influence wheat markets if more countries start banning U.S. wheat. But the biggest factor influencing wheat markets today is the growing world stocks of the commodity.

There are so many sources of wheat that prices are unlikely to change as the market reacts to the U.S. situation.

Japan has imported an average of 5.8 million tonnes of wheat annually over the past five years, 60 percent of which comes from the U.S. and the remainder from Canada and Australia.

White wheat accounted for 30 percent of the 3.47 million tonnes of U.S. wheat that Japan purchased in 2012-13.

Most Western Canadian spring wheat varieties don’t meet the soft white wheat colour requirements of Japanese noodle makers.

“I don’t know if we’ll be able to take advantage of it necessarily because a lot of times at this time of year it’s hard to put together the kind of volume that the U.S. can do in their white wheat,” said Townsend.

He is more focused on some of the threats looming as a result of the Roundup Ready wheat incident, including increased testing of wheat shipments, which will add costs and put downward pressure on prices.

“Every European trader who is phoning an American right now is asking for a discount. That’s just the way the world works,” said Townsend.

“The traders don’t care. They’re just mercenaries. They’ll use all this ammunition to get a better price.”