High prices may slow Canadian wheat export recovery

Improving weather conditions are expected to boost Canada's wheat production and exports, although high prices globally could slow the year-on-year recovery, the US Department of Agriculture's Foreign Agriculture Service (USDA FAS) has said.

Canada's wheat exports in the 2022-23 marketing year (August-July) are pegged at 24mn t under USDA FAS estimates, up from the 15.6mn t expected for 2021-22. But this would be 1mn t lower than the latest official USDA projections for the country.

Price-sensitive countries in southeast Asia including Bangladesh, Indonesia and the Philippines may partially switch from wheat to rice or pulse-based foodstuffs amid high wheat prices globally, according to the USDA FAS. Southeast Asian countries traditionally buy high-protein wheat from Canada to blend with lower-protein wheat from Ukraine, Russia or India.

And logistical issues within Canada could re-emerge in 2022-23 as a return to a standard export pace after an exceptionally weak year this season could trigger rail congestion. Rail is the primary method of delivery from farms to grain terminals, with sellers traditionally competing for limited rail capacity in the months following the harvest.

Meanwhile, the USDA FAS forecast a slightly smaller wheat production in 2022-23, pegging the harvest at 33.5mn t, some 500,000t lower than the official USDA estimate. Saskatchewan — the largest spring wheat-cropping province — has seen significant rainfall to boost soil moisture but more precipitation is still needed to support crop growth.

By Bilal Muftuoglu