Canada’s near-record wheat output in 2022 is expected to thrust the country into the position of a major global supplier in early 2023, capitalizing on the low supply prospects for key markets such as Argentina, the US and the EU.
Canada is expected to harvest 33.8 million mt of wheat in the marketing year 2022-23 (August-July), 51.5% higher on the year, according to Statistics Canada data. The more favorable yields are expected due to improved weather conditions, which would make Canada a major wheat supplier in the Western Hemisphere.
“The primary reason for the increase in area under the crop was the attractive prices amid supply constraints during the sowing season,” a trader based in Vancouver said.
In line with the bigger harvest, Canada’s wheat exports are also seen surging on the year. According to Agriculture and Agri-Food Canada, the country’s wheat exports were estimated at 23.5 million mt in MY 2022-23, up from 15.1 million mt.
Opportunity for Canada
While Canada’s wheat output outlook seems to be robust, there are some concerns over the crop in some pockets. Statistics Canada scaled down its estimate for wheat output by nearly 1 million mt, due to dry conditions in parts of the Prairies region. But that is not expected to cause a big dent in Canada’s total wheat export outlook.
Demand for Canadian wheat is likely to rise as weather concerns cloud prospects for Argentine and US crops. Argentina and the US are key suppliers of wheat to Latin America and East Asia.
In the US, concerns over winter crop quality are emerging due to exceptional drought in much of central and southern plains. An estimated 34% of the crop was rated good-to-excellent as of Nov. 29, down from 44% the same time one year ago, the US Department of Agriculture said.
Also, US wheat exports are likely to decline. Total MY 2022-23 commitments for US wheat were down 7% on the year at 14.1 million mt as of Dec. 8, the USDA said.
Trade participants expect Canada’s exports to China, Indonesia and Japan to rise in MY 2022-23. During the first three months of MY 2022-23, China imported 1.1 million mt of wheat from Canada, sharply up from around 700,000 mt bought in the entire MY 2021-22.
“With China relaxing the ‘zero-COVID’ policy, there is the likelihood that it may keep on purchasing wheat from Canada,” a trader with a multinational company based in Singapore said.
Apart from Asian countries, Canada may increase shipments to South American nations due to the drop in Argentina’s output.
Argentina is likely to harvest 11.8 million mt of wheat in MY 2022-23, down from 23 million mt. The USDA has pegged Argentina’s wheat exports in MY 2022-23 at 10 million mt, down from 16.3 million mt seen in the previous year.
Click here to see more...