Canada Markets

The USDA released its USDA Agricultural Projections to 2024 report Wednesday, a look at supply and demand estimates based on myriad assumptions out through the next 10 years. Given the challenges of determining supply and demand factors within a single crop year, this report will be taken lightly by many. The following is a quick look at projected agriculture commodity trade over the next 10 years and potential implications for Canada.

A positive feature of this report is the growing demand for ag commodities over the next 10 years. Canada is named as one of the major suppliers of ag commodities, which also includes Argentina, Australia, Brazil, the European Union and the United States, a group which is expected to continue to play a dominant role. At the same time, exports from Russia, Ukraine and Kazakhstan are expected to play a growing role in the next decade.

WHEAT

Global wheat trade is expected to increase by 16% or 24.5 mmt in the 10-year period between 2015/16 and 2024/25. A combination of growing incomes and population gains will make a number of countries in Africa, the Middle East along with Asian countries such as Pakistan and Indonesia poised to see the largest growth potential. Both Egypt and Indonesia are poised to remain the largest wheat buyers by 2024.

While the U.S., Australia, EU, Argentina and Canada have held an average of a 70% share over the past 10 years, this group is expected to see its share fall to 62% by the end of the period. Canada's wheat acreage is expected to remain under pressure due to more favorable canola returns, leaving little change in Canada's potential over the 10 years. Data charts indicate Canada's all wheat exports at 22 mmt in 2014/15, dipping as low as 18.8 mmt in the next three to four years before recovering to 19.7 mmt by the end of the 10-year period.

Canada's share of the total is also expected to fall from 12.2% in 2015/16 to 10.9% in 2024/25, or 19.7 mmt of the 180 mmt total. Over the same period, E.U. share is expected to grow by 1.8% to 19.8% while Russia's share grows from 12.3% to 15.2% over the same period.

Projections for the global soybean trade indicate a 28% growth in soybean exports over the next 10 years to 150 mmt, while meal trade is expected to grow 17% to 75.8 mmt and soybean oil trade is to grow by 23% to 11.7 mmt. While China is to remain the largest buyer, the share of exports of beans, oil and meal from Argentina, Brazil and the U.S. are expected to grow from 85% to 87% over the next 10 years.

The dominance of the three major suppliers leaves little room for outside suppliers, although the projections include data for "other foreign" which is suggested to grow from 4.3 mmt of soybeans in 2014/15 to 5.2 mmt by 2024/25. Canada's growing soybean acres, increasing movement to the West Coast and close proximity to Asian markets allows an opportunity for the industry to expand Canada's movement into this market. As well, the report also suggests that a projection for steadily growing exports of U.S. soybean oil allows an opportunity for imports of Canadian canola oil which are expected to grow strongly.

Total global coarse grain trade is expected to increase 15% or 23.8 mmt between 2015/16 and 2024/25, with corn consumption gaining at the expense of other coarse grains. Barley demand is expected to increase from 22.8 mmt in 2015/16 to 23.6 mmt in 2024/25, growth of 3.5%. Canada's share is expected to fall over the next decade due to decreased supplies as a result of competition from competing crops.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

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