Canada Markets

Agriculture and Agri-Food Canada's Feb. 18 Canada: Outlook for Principal Field Crops indicates "Grain prices are forecast to remain relatively strong on support from (i) tight Canadian supplies (ii) relatively tight global grain supplies (iii)expectations for a continuation of firm international demand."

Fast forward one month, or to the March 18 report, AAFC added to this list to include a fourth factor, or "supply disruptions caused by the Russian invasion of Ukraine." The world continues to come to terms with how this war will affect supply and demand factors and how trade patterns will change.

A challenge clearly remains for Canada to step up export movement to meet this shift in global demand for the current crop year. Of the 17 principal field crops monitored by AAFC, an upward revision was made to Canada's wheat export potential of 200,000 metric tons (blue bar) to 13.2 million metric tons for the current crop year, while a small 5,000 mt increase was forecast for canary seed exports this month. As seen on the attached chart, this month's estimates included a 20,000 mt-drop in dry bean exports, while missing from the attached chart is a 3,000-mt drop in the forecast for rye exports.

Of all the principal field crops, the brown bars on the attached graphic shows a month-over-month increase in the wheat export forecast of 250,000 mt for 2022-23 while the oat export forecast is raised by 50,000 mt.

AAFC's current forecasts for 2022-23 includes a 25.3 mmt or 36.3% year-over-year increase in production of all principal field crops, with a smaller 18.3 mmt or 20.9% increase in supplies forecast due to tight carry-in stocks. Exports are forecast at 50.110 mmt for all principal field crops, up 36.5% or 13.4 mmt from the previous crop year, while domestic use is forecast at 45.6 mmt, up 2.6 mmt or 6% from the current crop year.

When the changes in exports from the February forecast to the March forecast are totaled, including rye which is not seen on the chart, AAFC's forecast for Canada has added 482,000 mt of exports since the February report was released and also since the beginning of the Russia-Ukraine conflict. This is comprised of a 182,000 mt increase for the current crop year and a 300,000 mt increase for 2022-23.

While Canada may not be a major contributor in meeting the incremental global demand as a result of the Russia-Ukraine situation, AAFC is forecasting that stocks will grow from 2021-22 to 2022-23 for the principal field crops totaling 2.255 mmt, which includes 13 of the 17 principal field crops monitored. This indicates that future reports could result in further upward revisions in exports with further cuts made to ending stocks.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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