Canadian officials cut expectations for crop prices, amid growing confidence that the newly-started harvest will show “significantly” better results than last year, with the durum yield estimate receiving an upgrade already.
AAFC, Canada’s agriculture ministry, lowered by Can$15 per tonne to Can$415 per tonne its forecast for average 2022-23 domestic wheat prices, as measured by values of 13.5% protein spring wheat in the top growing province of Saskatchewan.
For feed barley, the forecast average Lethbridge, Alberta price was downgraded by Can$10 per tonne to Can$370 per tonne, and for oats by Can$25 per tonne to Can$435 per tonne.
The forecasts for canola and durum wheat prices were both cut by a more sizeable Can$50 per tonne, to Can$900 per tonne and Can$450 per tonne respectively.
‘More normal yields’
The downgrades took the price forecasts further below last season’s levels which, for many crops, set record highs, of for example Can$432 per tonne for barley, Can$631 per tonne for durum and Can$1,075 per tonne for canola.
“Crop prices, in general, are forecast to remain strong in 2022-23, although decreasing from the record to near-record highs of 2021-22,” AAFC said, citing expectations of a marked recovery in yields from last year, when the key Prairies growing region was badly affected by drought.
“Total field crop production in Canada is forecast to increase significantly [in 2022-23] due to improved weather conditions across the Prairies… resulting in a return to more ‘normal’ yields.
“This will allow for a rebound in supply and exports to around average levels.”
The ministry, while keeping most of its production estimates on hold, raised its forecast for the durum yield by 0.33 tonnes per hectare to 2.63 tonnes per hectare, even with the harvest still in its early stages.
In Saskatchewan, the biggest durum growing state, 8% of crop was in the barn as of a week ago, according to provincial ag officials.
“Yields were raised to 2.63 tonnes per hectares on account of better weather conditions across Saskatchewan and Alberta, resulting in reports of average to above-average yields,” AAFC said.
In fact, consultancy Mercantile Consulting Venture said that while “we have not heard any harvested [durum] yields yet… we have heard that lentil yields in some of the durum-producing areas of Saskatchewan and Alberta have been lower than expected”.
In Alberta, durum condition – rated by provincial ag officials at 46.2% good or excellent as of August 9 – was below the equivalent 2020 figure of 86.6%, if an improvement on the drought-hit 19.1% reading for the same period of 2021.
The AAFC upgrade leaves its durum yield estimate just shy of the five-year average of 2.71 tonnes per hectare from 2016-20 – ie excluding last year’s unusually poor result of 1.23 tonnes per hectare.
For non-durum wheat, the ministry foresaw prices staying “relatively strong” this season, “with support from tight world supply/demand fundamentals and continued uncertainty around grain movement in the Black Sea”.
The barley price, while undermined by “expectations for a recovery in domestic supplies… will remain historically high, largely underpinned by strong corn prices”.
For canola, while pencilling in a price “drop of about 10% from the record highs in 2021-22”, AAFC flagged a series of caveats to the forecast, including “supply chain shocks” and “shifts in trade patterns due to the Russian invasion of Ukraine”, besides the “strength of Chinese oilseed buying”.