Producer profit margins are expected to be under the gun in 2024-25, especially across Western Canada.
A new-crop outlook released by Farm Credit Canada Thursday said profitability for producers in the eastern part of the country (winter wheat, corn and soybeans) will be tight but close to break-even over the three-month outlook period. On the hand, western margins will face “considerably more pressure.”
On the expense side, all fertilizer prices are expected to be lower year-over-year. And while commodity prices are generally softening, fertilizer prices are dropping more quickly, easing at least some margin pressure.
However, FCC warned farmers will continue to wrestle with increasing equipment and interest expenses in the upcoming 2024-25 marketing year.
“There’ll be more margin pressure, especially for Western crops, than the sector has seen recently,” the outlook said.
In terms of crop prices, the FCC outlook suggested there may be upside in 2024-25 for some crops, including spring wheat. But for canola and others, further weakness is expected.
FCC forecast the average 2024-25 Saskatchewan canola price at $660/tonne. That would be down $5 from the current marketing year and well below the 2022-23 average of $845 but still up from the five-year average of $645.
Canola prices, along with soybeans, will be pressured by ample global soybean supplies going to the vegetable oil and biodiesel markets, and a possible increase in US soy acres in 2024, FCC said, adding that Brazil’s soybean production will be a wildcard to monitor.
The average 2024-25 Ontario soybean price is projected to slip $5 on the year as well, dropping to $590 –well down from the 2022-23 average of $715, but still above the five-year average of $565. At $270/tonne, the average expected new-crop Ontario corn price is up $15 from the current year and above the average of $255.
For spring wheat, the FCC is projecting the 2024-25 price at $335/tonne (SK), up $10 from the current year and above the average of $310. Durum is seen steady from 2023-24 at $405 (SK), $25 above the average.
Source : Syngenta.ca