WITH crops across large swathes of the Prairies hanging on by a thread and yields already on a steep downward trend, all eyes are focused skyward, praying that the dry pattern will change in time to salvage this season’s crops. While the issue has been building all spring, the global trade has been more focused on production and geopolitical issues elsewhere. However, the potential impact is now firmly in the spotlight, with the situation already supportive of global wheat and canola values, and this will only increase if essential rains fail to materialise this month.
The Canadian spring and summer crops may be in the ground, but they are in serious trouble if widespread soaking rains fail to eventuate before the end of July. A chilly and arid March and April were followed by an exceptionally hot May in many regions. Parts of the Prairies are experiencing their direst conditions this century. Soil moisture reserves have been seriously depleted across significant proportions of both Alberta and Manitoba and almost the entire province of Saskatchewan since the beginning of spring. Farmers are desperate, but the forecast does not provide the desired comfort, remaining dry and warm for at least the next two weeks.
Assuming the forecast proves correct, it would put June and July precipitation in Saskatchewan, which accounts for 40pc of the nation’s spring wheat production and 55pc of Canada’s canola output, at less than 60pc of the long-term average. Topsoil moisture conditions were reported at 21pc adequate, 55pc short, and 24pc very short. The province’s moisture deficits are already rivalling those of 2021, when final wheat and canola yields were 65pc and 56pc of the five-year average, respectively.
According to the latest Canadian Drought Monitor report, around 76pc of the nation’s farmland is either abnormally dry or in moderate drought. Drought conditions have continued to expand and increase in severity across the Prairies this summer, with temperatures 3-5°C above average on the eastern half while the western half was one to 2°C above average.
Planting swings to wheat, coarse grains, oilseeds
The area planted to wheat in Canada this year has risen to its highest level since 2001, according to the latest Statistics Canada Field Crop Survey, but growing conditions are varied, and soil moisture deficits are growing in many regions. The nation’s farmers also increased canola, barley, corn and soybeans plantings, but fewer hectares were allocated to oats, lentils and dry peas.
The seeding of Canada’s principal field crops was largely completed by the beginning of June, with the total area forecast at 31.593 million hectares (Mha), around 0.7pc higher than the 31.376Mha planted in 2022. Statistics Canada expects 96.7pc of the planted area to be harvested and is anticipating total field crop production will come in at 95.741 million tonnes (Mt), slightly lower than the 96.06Mt reaped in 2022.
The higher wheat area was attributed to favourable global prices leading up to the planting period and expectations of strong export demand in the 2023-24 season. The total wheat area is now expected to be 10.91Mha, 6.2pc higher than last year and 4.4pc above the early spring area estimate.
The area expansion was led by spring wheat which posted a 7pc annual increase to 7.91Mha, followed by durum wheat which increased 0.5pc to 2.43Mha. Winter wheat, mainly grown in the eastern provinces, increased 20pc year-on-year to 570,000 hectares in 2023. Across the Prairie provinces, farmers in Saskatchewan reported planting 6.9pc more wheat, in Alberta, the area reported was 4.4pc higher, and in Manitoba, the wheat-seeded area rose 7.2pc.
Wheat supply demand rises, barley falls
Wheat output is currently projected to rise 5.7pc from the 33.82Mt produced in 2022-23 to 35.75Mt this season, assuming trend yields. Adding carry-in stocks of 3.98Mt and imports of 0.13MT brings total domestic supply to 39.86Mt. Statistics Canada has pegged domestic demand 1.4pc higher at 9.31Mt and exports 1.2pc higher at 24.75Mt resulting in an increased wheat carry-out at season end of 5.8Mt.
While the latest Statistics Canada report pegged this season’s barley area almost 0.6pc higher year-on-year at 2.87Mha, its latest number is 4.4pc lower than grower planting intentions reported in April and 4pc lower than the average of the previous five years. Approximately 97pc of Canada’s barley is grown on the Prairies, with Alberta the biggest at 54pc of the total area, followed by Saskatchewan at 37pc and Manitoba with 5pc.
Assuming an average abandonment rate of 0.9pc of the planted area and a near trend yield of 3.66MT/ha, Canadian barley production in 2023-24 is expected to be 4.5pc lower than last season at 9.54Mt. With domestic demand 1pc higher at 6.17Mt and exports projected to decrease from 3.72Mt in 2022-23 to 3.33MT this season, the estimated barley carry-out comes in slightly higher year-on-year at 0.8Mt.
Canadian farmers have largely stuck to their canola rotation plans, with Statistics Canada’s June area penned at 8.74Mha, marginally lower than the early season area estimate of 8.8Mha. This is, however, almost 1pc higher than the area planted last season. Farmers in Saskatchewan reported planting 4.9Mha, up 8.8pc from 2022. In Alberta, reported plantings were down 2.4pc to 2.5Mha year-on-year, and the seeded area in Manitoba decreased 4.7pc to 1.2Mha.
Canola production is currently forecast at 18.4Mt, up from 18.17Mt in 2022-23. Total canola supply in 2023-24 is forecast to increase marginally as the rise in output offsets the tighter carry-in balance. Statistics Canada forecasts stable canola demand in 2023-24, with the domestic crush and export projections at 9.5Mt and 8.8Mt, respectively, on the back of strong global call for oilseeds, vegetable oils and protein meals. With significant investment underway to increase Canadian crush capacity, domestic demand is expected to increase at the expense of exports, but any new facilities are not expected to have a material impact until the 2024/25 season.