Grainswest - Fall 2024

Fall 2024 Grains West 44 BY NEIL TOWNSEND Canadian crops face good, bad and ugly in 2025 MARKET CANADA RARELY GETS THE respect it deserves as a steady and de- pendable crop exporter. Despite this solid record, in the 2024/25 marketing year, export prospects for raw unprocessed canola, wheat and durum are mixed. THE GOOD: WHEAT PROSPECTS In 2023/24, Canada exported 21.4 million tonnes of non-durum wheat, well above the five-year average of 17.4 million tonnes. Overall quality was good, and export demand was strong and consistent all year for spring wheat via Vancouver and seasonally through the St. Lawrence Seaway. As of late September, the overall supply of wheat among the major exporters was down year on year, according to the USDA. The world’s major wheat exporting nations, colloquially known as the Big 8, are: Argentina, Australia, Canada, the EU, Kazakhstan, Russia, Ukraine and the U.S. Their share of 2024/25 world wheat pro- duction is projected to be 47.9 per cent. This is the lowest of the 20th century as production is down in EU, Kazakhstan, Russia and Ukraine. The Big 8 are expected to account for 86.1 per cent of global wheat trade. Given that combined EU and Black Sea exports are forecast to drop from their 2023/24 total by 16 to 18 million tonnes, their fellow Big 8 nations must compensate for the drop in supply. The USDA forecasts wheat trade will decrease by eight million tonnes. Thus, the world’s buyers need to find alternative sources for eight to 10 million tonnes. Argentina is forecast to increase ex- ports by three million tonnes, but more than a third of its crop may significantly diminish in quality due to dry growing conditions. The Australian crop is like- wise forecast to increase by 1.5 million tonnes. However, frost in the East and dry conditions in the West have pushed down its expectations. The U.S. had a solid crop and is forecast to increase exports by three million tonnes. Combined, these three will max out at 7.5 million tonnes of additional production. Thus, the world will look to Canada to export at least as much as it did in 2023/24, which was 21.4 million tonnes. Canada will be hard pressed to oblige. Ag- riculture and Agri-Food Canada (AAFC) forecasts an export program total of just 20.5 million tonnes. Overall, there should be excellent opportunities to market wheat throughout 2024/25. THE BAD: DURUM PROSPECTS Durum suffered two shocks in 2023/24. Drought in the western Prairies lowered production to slightly more than four million tonnes from an average of around 5.5. This limits our export potential and supports global prices. Also, new export- ers such as Turkey and Russia emerged to capture market share and prices softened. MONITOR Exportuncertainties In 2024/25, Canadian production bounced back to six million tonnes. Including beginning stocks, Canada has an exportable surplus of more than 5.5 million tonnes and AAFC predicts exports will hit 4.8 million tonnes, up from 3.5 million last year. This added volume will weigh on the potential for durum price appreciation, and sustained upward mo- mentum for durum prices is unlikely. THE UGLY: POLITICS AND CANOLA With sluggish demand and fierce compe- tition, Canada struggled to export canola in 2023/24. As production faltered in the EU and Black Sea region and China forward-purchased a significant amount of Canadian canola, this looked set to change in 2024/25 despite disappointing western Canadian yields due to heat stress. The combination of increased domestic crush capacity, buoyant exports and lower than expected production looked ready to support prices. Then the ugly spectre of politics fell on the canola complex. China announced it would launch an anti-dump- ing investigation into Canadian canola ex- ports. Prices fell, and uncertainty spiked. As followed the arrest of Huawei CFO Meng Wanzhou, canola was an easy target in retaliation for Canadian tariffs on Chi- nese electric vehicles. Canada is unlikely to back down, and the process may take years to play out. The good news is early season Canadian exports have been robust, up significantly from the same time last year. The world needs Canadian wheat but has mixed feelings about our durum, and China now gives Canadian canola the silent treatment. Will the love return? Uncertainty will prevail throughout the marketing year. Neil Townsend is chief market analyst with FarmLink Marketing Solutions.