Harvest operations are in their final stages across Western Canada, with all of that newly harvested grain looking for a home. Seasonal trends in grain markets weigh on most crops at this time of year as the supply/demand balance is flush with new supplies, but the long-range price direction will soon refocus on demand.
Exports
It’s still relatively early into the 2023-24 marketing year, but total Canadian grain and oilseed exports were running well ahead of the previous year’s pace through seven weeks at 4.2 million tonnes, up from 3.2 million at the same point in 2022-23, according to Canadian Grain Commission data.
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Wheat and canola both stand out in the numbers, up by 41 and 149 per cent respectively. While wheat can be expected to steadily move out of the country, canola exports may run into headwinds.
Domestic crush margins are wide, which will keep canola flowing into local processors. However, canola is still relatively expensive compared to other oilseeds on the international front, and forward sales are reportedly down on the year.
Ocean freight
The Canadian Prairies are far away from many final destinations for the crops grown here, which means the cost of shipping can be a detriment at times. All things being equal, it’s much cheaper to ship barley from Australia to Chinese markets than it is to move the grain from Canada.
As an example, Canada has only exported 50,000 tonnes of barley so far this crop year – less than a third of what moved in the same time a year ago, due in part to increased competition from Australia.
The Baltic Dry Index, which is a major indicator of bulk shipping rates and global economic activity, hit its highest levels in four months in mid-September. Also of note, the Panama Canal is reportedly dealing with historic drought conditions, limiting how many vessels can move through at a time and increasing wait times considerably.
India
India comes and goes into the Canadian market, with demand for pulses especially dependent on its own production and domestic policy. After a poor monsoon season and in an effort to shore up supplies, India has lowered or eliminated import tariffs on many pulses.
Not too long ago, there was optimism that Canada could move more lentils and peas to the country this year.
However, a mounting diplomatic dispute, as Canada has accused India of participating in the assassination of a Canadian citizen in Canada, could throw a wrench in that business. Time will tell whether the need for pulses outweighs any possible retribution, but the situation will be watched closely by pulse traders in both countries as it develops.
