Canadian officials downgraded expectations for domestic canola and wheat prices, as they raised inventory forecasts, but acknowledged that these estimates ignored the growing risk of weather damage to crops.
AAFC, Canada’s farm ministry, trimmed by Can$5 a tonne to Can$215-245 a tonne its forecast for average prices of non-durum wheat as obtained by producers in the top growing province of Saskatchewan in 2019-20.
The downgraded price forecast range - which at its lower end would mean the lowest prices since the Can$203 a tonne recorded in 2009-10 – came as the ministry factored in Statistics Canada data earlier this month on 2019 harvest prospects, and on inventories as of the close of last season, in July.
Thanks largely to an upgraded carry-in inventory figure, the forecast for Canadian stocks of non-durum wheat as of the close of 2019-20 was raised by 700,000 tonnes to 5.00m tonnes, with the ministry also noted “higher world and US supply” in its price outlook.
For canola, the forecast for prices was cut by a further Can$20 a tonne to Can$440-480 a tonne in Vancouver, shutting off the last hopes of values matching last season’s Can$497 a tonne.
Indeed, even at the top end of the downgraded price forecast, values would be their lowest in a decade.
AAFC raised its forecast for Canadian canola exports at the close of 2019-20 by 750,000 tonnes to 4.50m tonnes, again citing larger-than-thought carry-in inventories, this time “due to the sharp decline in Chinese imports since January” amid the countries’ diplomatic spat following Canada’s arrest of a Huawei executive.
The ministry also noted “pressure” on canola values from “lower world vegetable oil and protein meals prices”, but added that “adverse growing conditions in Europe and Australia will offer support to Canadian exports” against the China downturn.
‘Abundant feed grain supplies’
For barley, the forecast for average 2019-20 prices in the Lethbridge, Alberta market was also lowered, by Can$20 a tonne to Can$210-240 a tonne, as the estimate for end-season inventories was raised, by 250,000 tonnes to 1.70m tonnes.
“The average price of feed barley in Lethbridge feedlots has continued to decline since nid-June, in anticipation of abundant feed grain supplies for 2019-20,” AAFC said.
“As a result, the feed barley price for “2019-20 is anticipated to decrease from 2018-19,” when it averaged Can$260 a tonne.
Furthermore, “world barley production for 2019-20 is projected to rise to its highest level since 2008-09, largely due to higher output in the major world exporting countries.”
‘Cool wet weather’
However, the ministry acknowledged that its balance sheets estimates were based on 2019 harvest yield estimates which “not account for the cool wet weather in September in Western Canada which has delayed harvest and reduced the quality of the crop.
“As a result, the production estimates may be revised in subsequent reports.”
Canadian, and northern US, farmers are seeing an unusually slow harvest of spring-seeded crops such as wheat and canola,
In Saskatchewan, just 13% of spring wheat had been seeded as of last Monday, the lowest on data going back to 2009, and narrowly behind the pace set in 2014, when wetness also slowed the harvest – and led to yield and quality concerns.
In 2014, the percentage of Canadian western spring wheat rating as first or second grade came in at 56% - behind the then 10-year average of 77%, Canadian International Grains Institute data show.
For durum wheat, the proportion of 2014 Canadian western amber durum grading 1 or 2 fell below 20%, compared with a then 10-year average of 58%.
The concerns over similar setbacks this year have spurred a recovery of 7.0% in Minneapolis spring wheat futures so far this month.