OTTAWA, ONTARIO, CANADA — Canada is hugely important as a major world supplier of grains and oilseeds, and its exports are expected to increase to fill the gap created by the conflict in Ukraine. However, shortages and high prices are affecting farm inputs.
In its May 19 Grain Market Report, the International Grains Council (IGC) put Canada’s total 2022-23 grains production at 60.8 million tonnes, up from the forecast it made a month earlier of 60.1 million and well up on 2021-22 output of 45.9 million.
It put the country’s wheat production at 31.6 million tonnes, an unrevised figure from the previous month and up from 21.7 million in 2021-22.
Maize (corn) production was forecast at 14.1 million tonnes, up on the previous month’s 13.6 million tonnes and up from 14 million in 2021-22.
The barley crop in 2022-23 is forecast at 9.8 million tonnes, down from 9.9 million predicted a month earlier, but up on the 6.9-million-tonne crop in 2021-22.
Canada also is expected to produce 4.5 million tonnes of oats in 2022-23, revised up from 4.3 million, with the previous year’s output at 2.6 million. Rye production is seen unchanged from 2021-22 at 500,000 tonnes.
Canada’s total grains exports are put at 28.7 million tonnes, revised up from 27.1 million forecast a month earlier and up from 20.8 million the year before. The forecast for total imports is an unrevised 2.1 million tonnes, down from the previous year’s 5.6 million.
Wheat exports are put at 22.8 million tonnes, up from a previous estimate of 21.5 million and the previous year’s 16 million.
Exports of maize are forecast at 900,000 tonnes, unchanged from the previous month’s prediction and down from 1 million in 2021-22. Canada is expected to import an unrevised 1.8 million tonnes of maize, down from 5.1 million tonnes in 2021-22.
Barley exports are forecast at 3 million tonnes with 500,000 of it for malting, both figures unchanged from the previous month. Barley exports for 2021-22 from Canada were 2.4 million tonnes, including 500,000 of malting barley.
Canada also is expected to export 1.92 million tonnes of oats, revised up from 1.7 million, with the previous year’s exports at 1.36 million tonnes. Exports of rye are put at 75,000 tonnes, unrevised and unchanged from the previous year.
The IGC projected Canada’s 2022-2023 soybean production at 6.2 million tonnes, revised down from the previous forecast of 6.6 million. The 2021-22 crop was 6.3 million. Its output of rapeseed was put at 19.4 million tonnes, down from 20.2 million forecast earlier and well up from its 2021-22 crop of 12.6 million.
Canadian soybean exports are put at 4.1 million tonnes, the same as the previous forecast and as the previous year’s production, while imports are put at 500,000 tonnes, also unrevised and unchanged from 2021-22. Exports of rapeseed are forecast at 9.8 million tonnes, revised down from the earlier estimate of 10 million, but up from the previous year’s 5.9 million tonnes.
Wheat acres anticipated to increase
The USDA attaché said in an annual report on the grains sector dated April 29, that “planting decisions will be guided by canola disease pressures, dry planting conditions, high input prices, and high wheat prices, all of which favor increased wheat planting relative alternative crops such as canola.”
“Several farmers stated that they will not plant more wheat, no matter the price, because they already have a long-term rotation plan and it excludes wheat, which in recent years has earned a lower profit than canola and many pulses and specialty crops,” the attaché said.
“Secondly, though wheat is a low input crop relative to crops such as canola and corn, many farmers purchased their inputs months ago, before the fallout of Russia’s invasion of Ukraine sent fertilizer prices higher; therefore, the high input prices of wheat alternatives are not necessarily a deterrent.”
Countries such as Indonesia, Bangladesh, Morocco, and Tunisia typically depend on both Ukraine and Canada (and other countries) for their wheat supplies, the attaché explained.
“From Canada, these countries import Canadian Western Red Spring (Bangladesh, Indonesia, Morocco) and Canadian durum (Indonesia, Morocco, Egypt, Turkey, Tunisia), while they import primarily winter wheat from Ukraine,” the USDA said.
Some industry contacts told the USDA’s FAS office in Ottawa that they foresee Canada becoming a market of last resort for price-conscious countries that tend to blend Canada’s high-protein wheat with lower-protein, lower-cost wheat, such as Ukrainian winter wheat.
Wheat and oat milling sector
According to the Canadian National Millers Association, there are 48 wheat mills and seven oat mills in Canada.
CNMA said mills in the country process some 3.25 million tonnes of Canadian wheat each year, approximately 75% of which is produced in western Canada.
“The majority of eastern Canadian wheat processed is grown in Ontario, but milling wheat is also produced in Quebec and Atlantic provinces,” CNMA said.
CNMA puts the total tonnage of flour and other milled wheat products produced for human consumption at about 2.4 million.
Some byproducts of wheat milling are sold for use in animal feed and pig food, while small quantities of wheat flour are used for processing into non-food products.
The association estimates 600,000 tonnes of oats are processed at mills each year.
“This Canadian sub-sector relies heavily on the United States market and holds a disproportionate share of total North American oat milling capacity, having expanded considerably in the past 15 years,” CNMA said.
CNMA puts total employment in the grain milling sector in Canada at around 1,400 production workers and a further 500 people in other capacities.
Impact of high input costs
The attaché explained the forecast rise in maize output by noting that “planting decisions will be guided by high crop prices, but also high input costs.”
“Several analysts suggested that some farmers may switch from corn to soybeans this year to save on input costs,” the attaché said. “Corn is a high-input crop, requiring more fertilizer than alternative crops (e.g., soybeans, wheat) grown in Canada’s leading corn-growing province of Ontario.
“Ontario farmers are particularly vulnerable to the current fertilizer situation because they rely on Russia for 85% to 90% of their nitrogen fertilizer use, according to Fertilizer Canada.
Regarding oilseeds, the attaché explained in an annual report dated April 7 that Canadian farmers are not currently benefiting financially from today’s high canola futures prices because supplies from last crop are limited and already contracted out.
“However, they will benefit if global oilseed supply tightness continues and prices remain strong, or if producers can lock in current prices for next fall,” the attaché said. “Although production is forecast to increase significantly over 2021 levels, the downside risks to this outlook include on-going drought conditions, inhibited access to fertilizer and chemicals, and high fertilizer prices.”
If the crop is available, strong world demand means that exports will rise sharply, although that is on the assumption of reduced Ukrainian sunflower seed production.
Soybean plantings are expected to be higher for 2022-23, although, once again, the attaché said that “Eastern Canada is particularly vulnerable to Russia’s ban on nitrogen exports as the majority of Ontario’s nitrogen supply is typically imported from Russia.”
Trade is expected to increase because of growing global demand.