Ag Canada Boosts 2021-22 Pricing Projections

Agriculture Canada has ramped up its 2021-22 pricing projections for a number of Canadian crops, even if its latest monthly supply-demand update was mostly otherwise unchanged from September.

Released Wednesday evening, the government’s October supply-demand estimates suggest sharply higher season average prices for durum and flax compared to September, with relatively smaller gains for canola, oats, barley and wheat (excl durum). At the same time, Ag Canada left most of its ending stocks and other supply-demand estimates mainly steady from last month.

The season average durum price is now seen at $550/tonne (No. 1 CWAD 13%), up $150 from the September forecast and roughly 82% above the prior year’s season average of $302. “Pricing for durum has broken historical records sustained by short world supplies and quality concerns,” Ag Canada said in its accompanying commentary, noting there may be further upward pressure on prices if world demand remains strong.

Although Canadian durum exports are projected to tumble 46% to 3.1 million tonnes in 2021-22, Ag Canada said that would still represent about 70% of this year’s total supply. That compares to the last five years, when exports accounted for roughly 60% of the total durum supply.

Globally, durum production is estimated by the International Grains Council to fall by 6% to 31.9 million tonnes. However, projected durum use is only expected to decline about 2%, “leading to excess demand on global markets,” Ag Canada said.

At $1,150/tonne (No. 1 CW, cash, I/S Saskatoon), Ag Canada’s average expected flax price is up $275 from the September estimate and more than 1 ½ times the previous year’s $693.

“The outlook for flaxseed prices strengthened sharply over the past month on tight supplies and inelastic world demand,” Ag Canada said. “If realized, this would be a record price for flaxseed. However, this price forecast carries a high degree of uncertainty and is vulnerable to a sharp correction.”

The average 2021-22 canola price is estimated at $960/tonne this month (No. 1 Canada, cash, Track Vancouver), up $20 from September and $230 higher than a year earlier amid tight Canadian supplies and strong US soyoil prices.

The average wheat (excl durum) price is projected at $350/tonne (No. 1 CWRS, 13.5% protein), up $50 from September and well above $271 last year.

In addition to raising the average price forecast, Ag Canada also tightened its wheat ending stocks forecast this month, dropping it 500,000 tonnes to 3 million tonnes (down from 4.95 million in 2020-21 and the lowest on record) reflecting expectations of increased export demand due to the high quality of Canada’s crop.

The 2021-22 season average price for barley and oats is estimated this month at $360 and $370/tonne, respectively, up $10 for both from October. That compares to last year’s average barley price of $294/tonne (No. 1 feed, cash, I/S Lethbridge), which was already a record high, and last year’s average oat price of $301/tonne (US No. 2 Heavy, CBOT nearby futures).