WESTERN PRODUCER — Canadian wheat exports are running ahead of last year’s pace, raising questions about the official forecast that projects full year movement would be down almost 13 percent from last year’s record exports of 20.6 million tonnes.
Exports stand at 5.51 million tonnes to the end of week 14 of the crop year, up from 5.12 million at the same point last year.
The warm, dry fall helped speed harvest, allowing the export campaign to get off to an early start.
Agriculture Canada’s October supply and demand outlook pegged non-durum wheat exports for the year at 18 million tonnes, which is down from the record movement set last year at 20.61 million tonnes. The outlook reflects the expectation that this year’s crop was smaller than last year, at 25.78 million tonnes, down from 28.54 million last year, so there will be less to export.
Using the supply and demand outlooks available at the time, the Agriculture Canada report forecast year-end carryover to be fairly tight at 3.2 million tonnes.
The numbers will likely be adjusted after Statistics Canada releases its updated production survey results in December.
We are early in the crop year and final export movement can be affected by many factors, from weather to labour issues to trade frictions.
For now, let’s look at why wheat exports are hot this fall.
One factor might be Chinese buying.
China’s winter wheat harvest in May and June was hit by heavy rain. At the time, wheat futures markets shrugged off the news, but The Western Producer reported that the wet harvest would hurt quality and could cause China to import larger than normal amounts of quality foreign wheat to make up for the amount of domestic wheat downgraded to feed.
This fall, wire services reported China bought a lot of Australian wheat in September and were looking elsewhere for more.
Bloomberg News reported that Arlan Suderman, chief commodities economist at StoneX Financial Inc., expected the wet weather reduced the quality of 30 to 40 million tonnes of Chinese wheat.
As this column is written, statistics for destinations of Canadian wheat exports are available only for August and September.
China was not a big buyer in August, but in September it imported 301,000 tonnes, making it the biggest importer of Canadian wheat for that month. September’s totals were also helped by large shipments to several other countries, including Indonesia, Japan and Nigeria.
But expectations are that China will be a big buyer this year. The U.S. Department of Agriculture’s November monthly supply and demand report increased its forecast of Chinese wheat imports from all sources to 12 million tonnes, up one million from the month before.
That means that for the second year in a row, China would be the world’s largest wheat importer, edging out Egypt, the usual leading buyer.Australia is the largest supplier of wheat to China. Australia last year had record production and exports. It shipped slightly more than seven million tonnes to China in bulk (October 2022 to September 2023) and almost 560,000 in containers.
Canada in 2022-23 (August-July) shipped 2.97 million tonnes of wheat to China, making it the largest importer that year.
The U.S. supplied about 1.2 million tonnes, mostly white wheat. China was the fourth largest buyer of American wheat.
While China is stepping up its wheat buying, global wheat prices are still held back by strong competition from Russia. The USDA November supply and demand report raised its estimate of Russia’s crop by five million tonnes to 90 million, only slightly smaller than the record 92 million tonnes produced last year.
I should note that while weather damaged China’s winter wheat, its corn crop appears to have survived flooding from summer typhoons.
There was damage in some areas, but improved moisture and yields in areas not directly hit by typhoons helped to maintain a satisfactory harvest, according to Chinese officials.
While Canada’s wheat exports are so far running hot, canola exports are behind last year’s pace.
To the end of week 14 on Nov. 5, canola movement was at1.65 million tonnes, down from 1.8 million last year, according to the CGC.
However, domestic crush and other disappearance is running ahead of last year, with the total to Nov. 5 at 2.84 million tonnes, up from 2.56 million last year.
So total use, domestic and exports, is about the same this year as last year.
Activity in the domestic crush industry is helped by strong incentive to export canola oil to the U.S. for its renewable diesel industry.
The price of canola and other oilseeds in the first half of November was edging higher as the market became concerned about dry weather in central Brazil’s soybean area and excess rain in the south.
Rain was expected this week in Brazil’s dry areas, but the extended forecast was for continued dry conditions.
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