Canada Markets

USDA Remains Bullish on Canada's Wheat Export Potential

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The blue bars represent Statistics Canada's reported forecast for all-wheat exports, including the forecast 14.8 mmt exports for the current crop year. The brown line represents the five-year average. The green bar is AAFC's forecast for 2022-23, which is compared to the official WASDE forecast (purple bar) and the Foreign Agricultural Service forecast (grey bar) for the year. (DTN graphic by Cliff Jamieson)

The USDA's Foreign Agricultural Service Grain and Feed Update remains bullish when it comes to Canada's wheat export potential for 2022-23, while presenting both opportunities and potential challenges.

This week's attache report has pegged Canada's 2022-23 all-wheat exports at 24 million metric tons (mmt), 1 mmt lower than the 25 mmt forecast included in the July WASDE report, while both are higher than the July AAFC forecast of 22.4 mmt. The two USDA forecasts include a 3.9 mmt carry-out for 2022-23, which compares to AAFC's most recent 5.7 mmt forecast.

At the same time, this month's attache report sends mixed signals surrounding Canada's export potential. The report points to the likelihood that tight global supplies will benefit Canada's export sector, while expecting price-sensitive countries such as Bangladesh, Indonesia and Philippines. After 11 months of this crop year, Indonesia is ranked as the second largest destination for Canadian wheat (excluding durum), while Bangladesh is seen as the sixth largest. The report indicates the potential for these price-sensitive countries may shift demand from wheat to rice and pulse products.

The USDA also points to concerns across the supply chain surrounding rail performance and the ability for the railways to recover in the event of sharply higher Prairie production. While recent weeks have seen the two railways spot from 92% to 99% of the cars wanted for loading in the week wanted, note that overall demand for cars in week 50 at 3,918 hopper cars is down 33% from the same week last year and 48% below the three-year average.

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