AAFC Forecast Boosts Soybean Export Numbers

AAFC Forecast Boosts Soybean Export Numbers

on May 5 | in Ag News | by | with No Comments

Agriculture and Agri-Food Canada tweaked a couple of its numbers for soybeans in its outlook for Canada’s principal field crops, released on April 13.

For 2015-16, the forecast for soybean exports was raised by 0.1 Mt, to a record 4.2 Mt, versus 3.8 Mt in 2014-15, on support from the strong export pace which is running significantly ahead of last year to-date. The report notes that the export pace is supported by the depreciation of the Canadian dollar against the US dollar and the wide basis which gives Canadian soybeans a price advantage into world markets. These factors are offsetting pressure from burdensome world soybean supplies, according to the report.

The forecast for domestic processing of soybeans was lowered by 0.1 Mt from last month, to a still brisk 1.9 Mt, based on the slowdown in the weekly crush pace. Projected carry-out stocks are unchanged from last month at 0.38 Mt while the price outlook also remains stable from last month at $400-430/t, down slightly from 2014-15.

For 2016-17, planted area is forecast to rise by 4%, to 2.3 mln ha, on expected attractive returns compared to alternate crops. Production is forecast to decline by 8%, to 5.8 Mt, on the assumption of trend yields compared to the bumper levels experienced in 2015-16. Supplies are forecast to decrease by 9% on the combination of lower carry-in stocks and reduced production. Exports are forecast to fall by 0.3 Mt, to 3.9 Mt, on tighter domestic supplies and competition from burdensome world supplies. The domestic crush is forecast to fall by 0.2 Mt on competition from burdensome world soybean oil and meal and the tightening of domestic supplies. Carry-out stocks are forecast to fall to 0.30 Mt from 0.38 Mt in 2015-16.

Soybean prices are forecast to remain unchanged from last year, at $395/t-$435/t, as the weaker Canadian dollar offsets lower US soybean prices.

Other highlights from the report:


The Chatham corn price is forecast to increase from 2014-15 due to the weak Canadian dollar. The Chatham corn price, in-store elevator, has averaged below the previous five-year average. Although the Chatham basis levels are well above the previous five-year average the favourable exchange rate is captured in the basis workup. This crop year when comparing the nearby Chatham average price to the nearby average US corn futures average price in Canadian dollars, the spread between the two is wider than the previous five-year average. Canadian corn prices have benefitted from the soft Canadian dollar with overall higher prices than 2014-15 and this is despite a slight decline in the US corn average futures price.

For 2016-17, seeded area is forecast to decrease by 4% from 2015-16 due higher winter wheat area in Eastern Canada and competition from other crops. Carry-in stocks are at a near-record level. Production is forecast to decrease 11% to 12.1 Mt due to the lower area and lower average yields. Imports are forecast to increase by 23% due to the lower domestic supply. Despite high carry-in stocks and increased imports, lower production will cause total supply to decrease by 3%. Total domestic usage is forecast to increase due to a small increase in ethanol production, industrial use and livestock feeding. Exports are forecast to decrease to 0.50 Mt due to the tighter total supply and strong competition from the major corn exporting countries. Carry- out stocks are forecast to decrease by 10% to 1.8 Mt and remain above the previous five and ten-year averages. The Chatham corn price is forecast to decrease from 2015-16 due to a softer US corn future’s price and a slight strengthening of the Canadian dollar.

The USDA’s 2016 Prospective Plantings showed a 6.4% increase in intended US corn area to 93.6 million acres, compared to 2015, despite earlier forecasts for lower corn prices and high input costs. The report was bearish for US corn prices. Assuming normal growing conditions and an average yield similar to last year, US corn production of 14.4 billion bushels is anticipated which has the potential to raise US corn ending stocks to over 2.5 billion bushels, a 40% increase from 2015-16. If the area increase holds the prospects for any US futures corn price turn-around appear to be very remote.


For 2016-17, area seeded in Canada is forecast to decrease by 2% as a 24% increase for winter wheat is mostly offset by a 4% decline for spring wheat. The increase in seeded area for winter wheat was in Ontario where seeding conditions in the fall of 2015 were much better than in the previous fall. The winter wheat seeded area in western Canada was nearly the same as for 2015-16. In western Canada, spring wheat has competition from durum, oilseeds and pulses which is expected to limit the seeded area. Production is forecast to increase by 4% to 23 Mt because of higher yields. Supply is expected to fall by 8% as the rise in production is more than offset by lower carry-in stocks. Exports are forecast to fall by 9% to 16 Mt because of the lower supply. Carry-out stocks are forecast to fall by 17% to 2.5 Mt.

The area seeded to winter wheat in the US fell by 8% from 2015-16 and the spring wheat area is expected to decrease by 14%, resulting in an overall decrease of 9%. Production is forecast to fall by 3.1 Mt to 52.7 Mt, while supply increases by 2.7 Mt to 82.3 Mt. Domestic use is expected to rise by 0.9 Mt and exports are forecast to rise by 1.4 Mt. Carry-out stocks are forecast to increase by 0.3 Mt to 26.7 Mt.

The average crop year producer price in Canada for wheat is forecast to be the same as for 2015-16 because support from the lower Canadian supply is expected to be offset by a slightly stronger Canadian dollar, the higher US supply and the higher world supply.

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