Record-high soybean crop forging path to China

Canadian soybeans are forging a path to China, the world’s top buyer, as Canada’s relatively small production creeps across the country’s western growing belt and establishes a modest niche in global trade in the crop.

Total Canadian soybean exports amounted to 868,300 tonnes from August through October — the first three months of the 2012-13 crop year — more than double the pace of a year earlier, according to Canadian Grain Commission data.

Of that total, China accounted for nearly two-thirds of Canada’s export sales, or about 538,000 tonnes in three months. It bought just 166,000 tonnes from Canada in 2011-12.

"I don’t think it’s a blip, I think it’s probably going to be a trend," said analyst Jonathon Driedger of FarmLink Marketing Solutions in Winnipeg. "Is that number going to grow? I think that’s going to be limited by how much we can crank up soybean production."

Canadian soybean production reached a record 4.9 million tonnes in 2012-13, Statistics Canada said last week.

That’s puny compared with the crops in the United States and South America. But with drought curbing soybean production in the U.S., the world’s biggest soybean source, to the lowest level in four years this year, some importers are looking for sources to top up supplies until South American harvests are available early in the new year.

Canada also harvested a record high 13.1 million tonnes of corn this year as farmers cashed in on high prices of both soybeans and corn that were due to the severe drought in the U.S. Midwest.

Canada is more closely associated with canola, a rapeseed variant whose name incorporates the country of its origin. Both canola and soybeans are oilseeds, but canola plantings have soared in Western Canada due to strong returns for farmers, while soybeans have remained a small crop, limited by their longer growing season.

But farmers in Manitoba have become more comfortable growing soybeans, which adds the nutrient nitrogen to the soil, making it a valuable rotation with cereal grains.

Plantings hit a record 800,000 acres in the flood-prone province, and are likely to hit one million acres next year, said Dennis Lange, a crops advisor with the Manitoba agriculture department at Altona. Canada’s biggest soy supplies continue to come from Ontario.

"We’ve gone through a number of wet seasons in Manitoba and the soybeans have seemed to come through those very well," Lange said, adding that shorter-season varieties have also made the crop’s western expansion possible.

Canola is the main crop being displaced by the growing popularity of soybeans in Western Canada. Canola plantings have hit a record high six years in a row, but some expect farmers to taper back this spring after hot, dry mid-summer weather resulted in harvest disappointment.

The crop could eventually spread to significant numbers of acres in Saskatchewan and Alberta, Lange said, limited mainly by drier conditions in some areas of those provinces.

Some farmers will also continue to be wary of the risk from Canada’s cold climate. The first significant freezing temperatures in Western Canada typically occur by mid-September, when May-planted soybeans are still being harvested.

Shipments off West Coast

Canadian trade patterns are subtly shifting to reflect soybeans’ popularity.

Exporters shipped more than 116,000 tonnes of soybeans through Canada’s Port Metro Vancouver in October, a rare export shipment of the crop directly from the country’s West Coast, rather than through U.S. channels.

"To physically load train cars and move it out of Vancouver is not something we’ve seen too often with soybeans," said Neil Townsend, director of market research at grain marketer CWB. "It does represent the fact that more and more acreage in (Manitoba’s) Red River Valley is going into soybeans. In a year like this when the soybeans had a pretty good finish to them and the yield was high, there is an excess supply of soybeans in Western Canada that needs an export outlet."

Soybean exports via the West Coast have increased steadily to 148,000 in 2011-12 from zero just four years earlier.

The United States’ soybean production of nearly 81 million tonnes in 2012/13 is neck and neck with Brazil for the world’s largest output.

– Rod Nickel writes for Reuters from Winnipeg.