Early season Canadian wheat exports are going well, an important development in a year when it looks like we might harvest a record wheat crop.
The expectation of good wheat crops here and around the world are putting downward pressure on prices, and there is a general depressed feeling across all crop markets, even though there have been years when the oversupply situation appeared much worse.
But let’s not get bogged down in the market negatives yet.
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The good news is that in the first nine weeks of the crop year, to Oct. 5, wheat exports totalled 3.57 million tonnes, according to the Canadian Grain Commission.
That is up 413,000 tonnes, or 13 per cent, over last year at the same time and almost 16 per cent ahead of the five year average from 2020-21 to 2024-25.
The strength was particularly shown in week eight when a huge 841,000 tonnes of wheat moved out.
At the time this was written, we had export destinations only for August, and that showed significant movements to Spain, Japan and Indonesia, but one month of data isn’t enough to show trends.
The grain commission numbers for week nine also show that exports for durum, barley and lentils were also running ahead of last year at the same time.
The big disappointment, of course, is in canola, where exports totalled 796,000 tonnes, less than half last year’s exports of 1.951 million tonnes at the same point.
Canola exports this year are similar to, but slightly better than, other years when we were also facing Chinese import restrictions.
This year’s 796,000 tonnes is compared to 730,000 in 2023-24, 521,000 in 2022-23 and 715,000 in 2021-22.
There is modest positive news on the canola front.
Federal foreign affairs minister Anita Anand was expected to be in China Oct. 17 to meet with the Chinese foreign minister to continue to rebuild dialogue with the Asian giant and to try to arrange a meeting between Canadian prime minister Mark Carney and Chinese president XI Jinping.
As I noted in a recent column, there is an opportunity for them to meet at the Asia-Pacific Economic Co-operation forum in South Korea at the end of this month.
However, the diplomatic waters are churned up and murkier following U.S. president Donald Trump’s new tariff threats against China, which he amped up on Oct. 10 but then backed away from on Oct. 12. Those threats were in response to China increasing restrictions on its exports of rare earth products critical to the development of high tech electronics and computers.
If the two superpowers are at each other’s throats in a full blown trade war, it would likely be more difficult to get China to pay attention to its relationship with Canada.
Turning back to wheat, it is frustrating to see the Minneapolis spring wheat price decline to a level not seen since late 2020.
As spring wheat trades around US$5.25 a bushel, it is about $1.25 lower than where it was last winter and spring.
That drop seems excessive, even if there are reasons for pessimism.
Harvest data is still coming in from around the world, but for now it appears while production will be up from last year, so will demand, and there won’t be a big increase in stocks at the end of the year.
The U.S. Department of Agriculture forecasts that at the end of 2025-26, global wheat stocks-to-use will stand at 32.4 per cent, unchanged from last year.
It sees the U.S. all-wheat stocks-to-use ratio falling to 42.1 per cent, down from 43.3 per cent last year.
So from a global view, there is not a severe over supply.
There are however, other negatives at play.
The grain world has become used to Russia and Ukraine being at war, and expectations are for ample Black Sea supply.
China was a surprise big wheat importer in 2022-23 and 2023-24, buying close to 13.5 million tonnes in each of those years, supporting wheat’s price.
However, it bought only about 4.1 million tonnes last year and is forecast to import about six million this year, much of it from Russia.
Also, although U.S. wheat stocks-to-use at 42.1 per cent are not a big burden from an historical viewpoint, they are nowhere near as tight as in 2022 when they were 30 per cent, which helped lift prices.
Also, the U.S. corn stocks-to-use forecast at 13.1 per cent this year is up from an exceptionally tight 8.6 per cent last year and is the highest since 2019. Corn supply and price influences wheat prices. Corn futures are also the lowest since late 2020.
