Crop producers reported another strong year in 2016 despite weather challenges in Western Canada, according to . Total crop receipts were 5.8% higher than 2015 due to strength in canola (15%), corn (11%), pea (68%), and soybean (21%) receipts. Potato receipts were 12% stronger in 2016.
I expect cash crop receipts to remain strong in 2017, recording a 1% increase over 2016 levels in Eastern Canada, while crop receipts in Western Canada could see a 1% decline.
Cash crops remain strong in Eastern Canada
The global supply of corn and soybeans will grow in 2017-18, putting downward overall pressure on U.S. prices. Canadian production for both commodities should climb significantly if are accurate. Strong livestock production should support the demand for domestic feed. Overall, higher production of corn and soybeans will be offset by lower prices, resulting in slightly higher crop receipts in 2017.
Grain and oilseed receipts soften in Western Canada
Grain and oilseed receipts in Western Canada are going to remain historically strong, even accounting for a potential 1% decline. Weather challenges in 2016 will impact 2017 revenues due to poorer quality being marketed. Weather will continue to impact crop receipts in 2017, early estimates indicate that will go unseeded. The large global supply of wheat will continue to exert downward pressure on wheat prices. Yet, there are also positive trends. Continued strength in the canola market domestically and internationally will remain supportive of crop revenues. Pulse receipts remain sensitive to market conditions in large producing countries. It seems as if Indian producers may not be able to replicate their 2016/17 production prowess.
Potato revenues projected to decline from 2016
Potato receipts are projected to decrease 1% in 2017. Production will recover in Ontario in-line with normal production levels. The Canadian dollar will continue to support Canadian potato prices and promote exports to the U.S. and around the world. U.S. potato production is expected to increase after declining in 2016 which is expected to put some downward pressure on prices for the new crop.
What do these projections mean for you?
Crop receipts will continue to benefit from the relatively low Canadian dollar, but keep an eye out for the pattern in the loonie’s value. An increase over our projected 2017 average of US$0.75 would lower the price producers receive, and make our production less competitive with competing commodities in export markets.
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