Canada's bread wheat exports set to rise as US faces shortfall


Canada's 2017/18 wheat production is marked down from last month by its official analyst, but its export volumes could still be higher than last year's, despite reports of dry conditions in its prairie states.

Agriculture and AgriFood Canada  has reduced its wheat production forecast by  nearly 1.3 million tonnes from the June figure,  in line with a reduced planted area estimate from Statistics Canada.

It now predicts a 22.7m tonne Canadian wheat crop (excluding durum), down 5% on the 23.96m tonnes harvested for 2016/17. The fall is largely due to an assumption of trend yields of 3.3 tonnes/ha after last year's exceptional 3.68 tonnes/ha yield.

Canada's wheat exports up 3%?

But higher carry-out stocks and a reduced domestic usage – last year's high volume but poorer quality crop saw more crop diverted from export markets to Canada's animal feed mills – means exports should be up on 2016/17. The AAFC expects exports to increase by 3% year-on-year to 16.6m tons from 15.6m tons last year, although they will be limited by supply.

The latest USDA WASDE report predicted a 15m ton fall in US wheat output to 47.9m tonnes for 2017/18, due to a "lower seeded area compounded by higher abandonment and lower yields," stated AAFC wheat analyst Stan Skrypetz.  Therefore, he expects  "the average crop year producer price in Canada for wheat to increase from 2016-17 due to the lower Canadian and US wheat supply and the forecast for a weaker Canadian dollar."

Statistics Canada reported the wheat area for 2017-18 rose by 1% to 7 million hectares, with a 2% increase in spring wheat sowings more than offsetting a 10% reduction in winter wheat plantings. Growers have shifted to spring wheat from winter wheat and durum. The hard spring wheat crop is projected to comprise 80% of Canada's wheat area, up from 76% last year.

Dry conditions in the Prairies

"Despite dry conditions throughout the season, topsoil moisture remains relatively favourable in Alberta and Manitoba," noted the analyst. "Conditions throughout the province are also rated higher in many regions than their five-year average, but these also are experiencing a bit of a nosedive recently.

"As a result of these recent and expected dry conditions spring wheat production decreased 3% from last update to 19.3 million tons with the largest reduction (325,000 tonnes) coming from Alberta.

If dry conditions continue throughout August and September, spring wheat production could fall as low as 17.2m tons. If these conditions linger and worsen as the season progresses, there is the potential for our production low bound to fall even further.

With the USDA already warning that reduced wheat production could see it having to import its third highest volume of wheat in 2017/18, Canada could still struggle to replace US volumes to meet global demand for the high protein wheats needed to improve the quality of breadmaking flours around the world.


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