From the Outlook for Principal Field Crops Report
By the Market Analysis Group of Agriculture and Agri-Food Canada
Despite concerns over planting conditions, market analysts at Agriculture and Agri-Food Canada are forecasting a marginal increase in the area seeded and total production in Canada this year.
The latest outlook report, released on April 16, included the preliminary look at the upcoming 2019-20 crop year.
While the report notes that moisture conditions remain below normal across Eastern and Western Canada, the issue is not currently expected to have a significant impact on planting decisions. Expected commodity prices, input costs and perceived delivery opportunities will play a significant role in determining the mix of crops. Nonetheless, assuming trend yields, AAFC is currently forecasting a marginal increase in total area seeded and total production in Canada.
Carry-out stocks are forecast to increase as higher supply more-than offsets the increase in exports. World grain prices will continue to be pressured by an abundant supply of grain, relative to demand, at the global level but the impact on grain prices in Canada will continue to be partly mitigated by the low value of the Canadian dollar. A survey-based report on seeding intentions for 2019 will be provided by Statistics Canada on April 24.
For 2019-20, the seeded area for corn is forecast to increase due to continued good overall demand, especially for high-quality corn. Production is expected to rise by 6% to 14.7 million tonnes on a larger area and higher yield. Imports are expected to decrease due to higher domestic production of corn and barley.
Due to the significant decline in carry-in stocks and imports, total supply is forecast to decrease by 3%. Exports are forecast to decrease due to lower supply. Total domestic use is forecast to decrease as the lower feed, waste and dockage are expected to more-than-offset higher food and industrial use. Carry-out stocks are forecast to be the same as last year at 2.0 Mt which is below the previous five-year average.
The Chatham corn price is expected to increase slightly to $185/tonne due to higher U.S. corn prices and the weak Canadian dollar.
For 2019-20, the area seeded is forecast to decrease by 3% from last year to 2.48 Mha, mostly due to dry growing conditions in Western Canada. Production is forecast to fall to 7.0 Mt due to the lower area and lower average yields, which are based on 5-year averages.
Total supply is forecast to decrease by 7% to 8.0 Mt, resulting in a 9% drop in exports to 5.0 Mt. Exports are destined for a diverse group of countries. Domestic processing is forecast to decrease slightly to 1.9 Mt, on projected stable domestic soyoil consumption. Carry-out stocks of soybeans are forecast to tighten to 0.48 Mt from 0.55 Mt in 2018-19.
Soybean prices are forecast to rally slightly to $400-440/t on support from stronger U.S. prices and a stable Canadian dollar-U.S. dollar exchange rate.
Wheat (excluding durum)
For 2019-20, the area seeded to wheat in Canada is forecast to increase by 9% from 2018-19 as a 4% decrease for winter wheat is more than offset by a 10% increase for spring wheat. The spring wheat area is forecast to increase because of relatively good prices for wheat and a shift out of durum, winter wheat and canola in Western Canada. Production is projected to rise by 8% to 28 Mt. Supply is forecast to increase by 5%, as lower carry-in stocks partly offset the increase in production. Exports are forecast to fall by 1% due to higher world production. Carry-out stocks are forecast to increase by 35% to 5.4 Mt.
Average Canadian producer prices for wheat for the crop year are forecast to fall from 2018-19 because of the higher world and Canadian supply.