Why, if global grain stocks are shrinking, are Canadian prices for wheat, corn, canola and soybeans declining?
Al Mussel, Ted Bilyea and Douglas Hedley of AgriFood Economic Systems say it’s mainly because Canadian prices are tied to the United States.
Mussel said corn exports from the U.S. were down in 2023. Meanwhile, corn exports of the other major exporters have increased markedly - between 2014-2023 corn exports from Brazil almost tripled; corn exports from Argentina more than doubled, and Ukraine corn exports almost doubled between 2014-2019 before decreasing to a steady level ranging around 25 million tonnes.
Moreover, U.S. corn exports are increasingly staying close to
home in Mexico and Canada.
The combined share of Canada and Mexico now take 47 per cent of U.S. corn exports.
Early in the previous decade, the U.S. was vying with Brazil as the largest soybean exporter. Since then, U.S. soybean exports have ranged around 50 million tonnes while Brazil’s soybean have roughly doubled to more than 100 million tonnes.
But the U.S. soybean crush increased to a record, soybean oil exports are decreasing and soybean meal exports are increasing.
The reason is rapidly increasing demand for fats and
oils in manufacturing renewable fuels, especially renewable
diesel.
During the past few years, the United States has jumped
from accounting for 50-60 percent of Canadian canola oil
exports to 91 percent in 2023.
Canola oil supplies should remain robust as Canada announced plans to expand crush capacities in the next several years.
In other words, U.S. renewable policy is diverting Canadian
canola from more consumer-oriented growing export
markets, tying Canadian prices to the U.S. market.
Yet the report ends by saying “if we are entering a
strong trend toward a period of greater global scarcity,
as multiple indicators suggest, then as one of the few
surplus producers and major net exporters of agri-food
products, this is an important issue for Canada- and the
wider world.”
