Canada Markets

Agriculture and Agri-Food Canada's October Canada: Outlook for Principal Field Crops saw very few changes reported, although the average price forecast for many crops was revised higher.

When it comes to forecast exports, only two changes are noted. One is a modest increase in chickpea exports of 15,000 metric tons to 150,000 mt, equal to the volume shipped in 2020-21.

The other change, and by far the largest revision, is a 500,000-mt increase in the forecast for Canada's wheat exports (excluding durum) to 13 million metric tons. This is a second upward revision, up 2 mmt from the 11 mmt forecast released in August, while is forecast to drive ending stocks to 3 mmt, which would be the lowest on record.

AAFC points to a higher abandonment level this year in their commentary although current estimates do not indicate this. The current estimates show 96.3% of acres were harvested, based on Statistics Canada's latest estimates. This is down only 1.6 percentage points from 2020 while only 0.1 percentage point below the five-year average. As mentioned in this space in the past, the USDA is using a 10.5% abandonment rate in its estimate for Canada, or expecting 89.5% of acres to be harvested.

This uncertainty comes at a time when five of the world's eight largest wheat exporters (all-wheat) are forecast to see a year-over-year drop in production, with a 12.4 mmt drop in production estimated in 2021 across the eight, according to the USDA's FAS tables. At the same time, the same group is forecast to export close to 5 mmt less than the previous crop year, with five of the eight also forecast to ship a lower volume. By far the largest year-over-year drop is forecast for Canada.

This week's USDA attache reports shows Australia's exports at 23 mmt, below the official USDA estimate of 23.5 mmt and last year's 24 mmt. Note the USDA is forecasting a 31.5 mmt crop which compares to Australia's ABARES at 32.6 mmt. As well, the USDA's attache report on Kazakhstan estimates production at 12 mmt, which compares to the official USDA 12.5 mmt forecast. Exports are forecast at 6.5 mmt, which compares to the 7.2 mmt official estimate.

The attached chart shows the trend in the export forecast for Canadian wheat (excluding durum), with the first estimate released in January prior to the start of the crop year, with both the 2020-21 and 2021-22 trend shown.

In 2020-21, the export forecast rose from 19.2 mmt in October 2020 to 21 mmt by January 2021 and was reported as high as 21.1 mmt by March.

While Canada should face a similar demand potential in the current crop year, supplies will be a limiting factor.

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