Canada puts 7-year lows for barley, canola prices on the cards


Canadian officials trimmed expectations for farm prices of wheat, and saw barley and canola values potentially hitting seven-year lows, as they factored in improved crop hopes.

AAFC, Canada's farm ministry, reduced by Can$10 a tonne to Can$205-235 a tonne, its forecast for the average price that wheat growers in the top producing province of Saskatchewan will receive for this year's crop, putting a likely year-on-year decrease in values on the cards.

The ministry highlighted the "higher US and world supply, and the forecast for a stronger Canadian dollar", which cuts the value, local terms, of assets priced internationally in US dollars.

However, the downgrade also came as AAFC hiked by nearly 1.4m tonnes to 23.68m tonnes its estimate for domestic production of conventional (ie non-durum) wheat this year, factoring in the results released last week of a Statistics Canada survey of farmers.

For durum wheat, the type used in making pasta, the forecast for average producer prices in 2016-17, as measured in Saskatchewan, was downgraded by Can$15 to Can$235-265 a tonne, down from Can$290 a tonne received for last season's harvest.

AAFC, which hiked by 607,000 tonnes to 6.91m tonnes its forecast for this year's domestic durum harvest, flagged "higher Canadian and world supply", besides the stronger currency.

Seven-year price low

However, the biggest downgrade to price forecasts came for barley, for which AAFC cut its price forecast for feed supplies, as sold in the Lethbridge market, to Can$155-185 a tonne, from Can$190-220 a tonne.

Canadian farmgate prices for barley, canola and (non-durum wheat)

2016-17: Can$155-185, Can$470-510, (Can$205-235)

2015-16: Can$209, Can$509, (Can$225)

2014-15: Can$201, Can$489, (Can$210)

2013-14: Can$188, Can$503, (Can$205)

2012-13: Can$279, Can$650, (Can$285)

2011-12: Can$225, Can$601, (Can$290)

Prices per tonne. Source: AAFC

That would be the lowest level since 2009-10, and sharply below the Can$209 a tonne that farmers received on average for last year's harvest.

Again, the price downgrade reflected an upgraded production estimate, following the StatsCan report, with AAFC lifting its forecast for output by 700,000 tonnes to 8.70m tonnes – an revision reflected in a 550,000-tonne hike to 1.70m tonnes in the estimate for stocks remaining at the close of 2016-17.

"The average Canadian barley yield," estimated at 3.72 tonnes per hectare, "is the second highest all time Canadian total average barley yield, with only the record year of 2013-14 registering higher," the ministry said.

"The early dry conditions of the Prairie provinces were replaced with ample moisture and allowed for the excellent yields."

Canola price downgrade

For canola too, farmers were left looking potentially at a seven-year price low for their crop, after AAFC downgraded the estimate range to Can$470-510 a tonne, from Can$490-530 a tonne

That compares with the Can$509 a tonne received for last year's crop.

"In general, canola growing conditions are good across Canada," the ministry said, although adding that "some excessive late summer moisture [are] tempering yield expectations which were based on warmer-than-normal temperatures".

The prospective price fall would appear to have caught off-guard a number of growers who had been holding on to some of last year's crop, in expectations of weaker supplies this year, implying upward pressure on prices.

AAFC noted "heavy pre-harvest deliveries of canola from farmers to elevators", a factor which "signals a possible upward revision" to the level of the oilseed left in Canada's stocks at the close of 2015-2016.

The estimate for this year's harvest was lifted by 1.1m tonnes to 17.0m tonnes, in line with the StatsCan figure.


Readers choice: TOP-5 articles of the month by UkrAgroConsult