Canadian officials lifted forecasts for domestic canola, durum and wheat prices, amid hopes for a recovery in exports – which yet face logistical tests.
AAFC, Canada’s farm ministry, lifted by Can$15 per tonne to Can$440 per tonne its forecast for domestic durum prices this season, as measured in the top-growing province of Saskatchewan.
For non-durum wheat, including the country’s important supplies of high-quality spring wheat, the average price was upgraded by Can$15 per tonne to Can$420 per tonne for 2022-23, on an August-to-July basis.
The forecast for the average 2022-23 canola price, as measured in Vancouver, was lifted by Can$30 per tonne to Can$910 per tonne.
In all three cases, these would be the second highest prices on data going back to 2009-10, behind only levels set last season of Can$631 per tonne for durum, Can$447 per tonne for other wheat, and Can$1,075 per tonne for canola.
For non-durum wheat, the upgrade came as AAFC lifted by 200,000 tonnes to 18.50m tonnes its forecast for exports this season, taking above 6.0m tonnes the recovery expected from 2021-22, when shipments were constrained by a drought-shrunken harvest.
Indeed, shipments were seen “up 49% year-on-year and 4% more than the last five-year average”, the ministry said.
Latest data from the Canadian Grain Commission show Canada’s wheat exports for 2022-23 up to November 13 soaring by 48% to 5.53m tonnes, with China, Japan and Bangladesh having been big early buyers.
Slow producer selling
For durum wheat, for which AAFC full-season exports near-doubling to 5.00m tonnes, shipments are up a more modest 8.3% so far, to 1.08m tonnes.
The ministry said that volumes “are expected to pick up as the completed harvest enters the elevator system”.
Canada’s canola shipments have risen by 8.6% to 2.10m tonnes so far this season, a growth rate behind the 77% jump, to 9.30m tonnes, it is expecting for the whole of 2022-23.
However, so far producer deliveries of canola, at 5.58m tonnes, are running 3.9% behind year-ago levels – despite this year’s harvest estimated at 19.10m tonnes, up by 39% year on year.
Shipments have been backed by a strong performance for grain carrying by the Canadian National and Canadian Pacific rail companies, for which crops compete for capacity with the likes of oil and fertilizers.
Both rail companies in October posted monthly records for grain transport.
However, “issues with Canada’s export pipeline persist”, analysis group Mercantile Consulting said.
“Two of the current pressing issues are the delays at the Port of Vancouver due to the inability to load ships in the rain, and several rail labour agreements that will expire by the end of the year.”
‘Declaring force majeure’
The US Department of Agriculture’s Ottawa bureau this month, noting that eight rail labour agreements were set to expire in late 2022, warned that “in advance of a possible lockout or strike, the railway lines typically begin to reduce shipping pace to prepare for the possibility.
“If an actual stoppage occurs, possible outcomes include: the delay of farmer deliveries into the elevator system, vessel demurrage, contract extension penalties, defaults, declaring force majeure, deferring sales, and further damage to the reputation of Canada’s grain handling system.”
However, the bureau also acknowledged that, after the expiry of four labour contracts during the January-to-July period, “no major disruptions to the transportation of principal field crops occurred”.
AAFC also lifted its forecast for Canadian flaxseed prices, as measured in Saskatoon, by Can$60 per tonne to Can$750 per tonne, although that would still represent a fall from the Can$1,206 per tonne achieved last year.
“Flaxseed prices are forecast to decline but remain historically strong,” the ministry said.