Canadian farmers will gain a hefty boost to canola exports, and coarse grain prices, from the wet weather woes besetting their US peers, with values of oats to hit their highest in at least a decade.
AAFC, Canada’s farm ministry, hiked by 1.0m tonnes to 9.0m tonnes its forecast for the country’s canola exports in 2019-20, citing the “current export pace” but also the historically slow pace of US sowings of spring crops, including soybeans, thanks to persistent rains.
AAFC oilseeds analyst Chris Beckman noted “expectations of a sharp rise in prevent plantings across key US growing regions following excessive rainfall and widespread flooding”.
The revision reveres some of the downgrades that the ministry has made to Canadian canola export prospects for both this season and 2019-20 (starting in August) thanks to the trade tensions with China following the arrest of a Huawei executive.
“The export forecast remains highly uncertain,” Mr Beckman said.
Canola shipments for next season were, ahead of the downturn in relations with China, Canada’s top canola customer, pegged at 11.2m tonnes.
‘Supportive for grain prices’
AAFC maintained at Can$460-500 a tonne its forecast for canola prices in 2019-20 despite the improved export prospects, which will mean Canada’s stocks of the oilseed ending the season at 4.30m tonnes - 1.0m tonnes lower than previously forecast.
By contrast, the ministry raised its forecast for prices of barley, corn and oats despite keeping its stocks estimates unchanged.
It noted as “supportive for grain prices” last week’s increase to $3.80 a bushel, “equivalent to about Can$197 a tonne”, in the US Department of Agriculture’s forecast for US farmgate corn prices in 2019-20.
“The 2019 spring in the US has been extremely wet and cold, which has severely delayed the spring crop sowing and the crop emergence,” AAFC said, adding that “the soggy field conditions and delayed crop emergence have raised the potential for below-trend yields”.
Corn, barley values
The forecast for Canadian corn prices in 2019-20 was upgraded by Can$25 a tonne at both ends of the range, to Can$180-210 a tonne.
That compares with the Can$175-195 a tonne expected for this season, and puts the potential for a seven-year high on the agenda, with the most recent peak in Canadian prices of Can$257 a tonne set in 2012-13.
That was the same year that barley prices hit a high of Can$279 a tonne – a value which values next season have a chance of exceeding, with AAFC hiking its forecast for average prices in the benchmark Lethbridge market, in Alberta, to Can$250-280 a tonne, from Can$210-240 a tonne
“The Lethbridge cash feed barley price is expected to increase… due to higher US corn prices in 2019-20.”
‘Tightening domestic supplies’
Meanwhile, for oats, AAFC lifted its price forecast for 2019-20 to Can$260-290 a tonne, from Can$230-260 a tonne.
That raised the potential for oat values to top the Can$281 a tonne reached in 2013-14, which is the highest on readily available data going back a decade.
“Oat prices for 2019-20 in Canada are expected to increase from 2018-19, due to expectations for tightening domestic supply balance for 2019-20 and supports of higher US corn prices,” the ministry said.
For wheat, the ministry stuck by expectations of durum prices reaching Can$230-260 a tonne, and values of other wheat at Can$220-250 a tonne, despite trimming expectations for all-wheat stocks by 400,000 tonnes.
The downgrade, reflecting 200,000-tonne upgrades to export forecast for both durum and other wheat, would still leave inventories at a relatively high level of 6.70m tonnes.
“Average Canadian producer prices for wheat for the crop year are forecast to fall from 2018-19 because of the higher world, US and Canadian supply,” AAFC wheat analyst Stan Skrypetz said.
The briefing also noted Canada’s spring conditions which, in contrast to those in the US, have been unusually dry, saying for instance, that for barley “rain will be needed for crop germination and development”.
For oats too, “the dryness on the Prairies has helped… seeding, but more precipitation will be needed for crop germination and development”.
In fact, Alberta, Saskatchewan and western Manitoba did receive showers over the weekend, Maxar said, adding that all three of these provinces will see “widespread showers” this week.
These rains “should significantly improve moisture for spring wheat growth”, the weather service said.