Three outlooks from Grain World 2017 that matter for your farm
On November 14th and 15th, Canadian and international grain participants gathered in Winnipeg at the Grain World conference to hear the 2018 outlooks for the pulse, oilseed and coarse grain sectors from around the world. Wherever you’re located in rural Canada, the following trends will have an impact on your farm regardless if you actually grow that commodity.
1. Pulses still represent a long-term opportunity
The recent 50% tariff on peas exported to India obviously attracted attention: the 50% tax was much greater than expected, and expectations are that a tariff will be applied on lentils. This is on top of fumigation requirements implemented earlier.
In the short-term, pulse exports will be weaker, stocks will grow, and 2018 acreage will be lower due to strong price discounts.
On the positive side, demand for plant-based proteins is rising everywhere, leading to several pea processing plant investments announced for western Canada. In the long-term, these facilities will diversify our pea markets and solidify the industry.
2. Strong demand for oilseeds
Global demand for oilseeds continues to grow faster than supply. Projections indicate the world needs approximately 2 million additional acres of soybeans annually to meet growing oilseed demand. That’s great news for Canadian producers of soybeans and canola.
Canadian canola production is currently estimated at a record 19.7 Mt. Upward revisions are possible, but ending stocks are expected to be tight at the end of the crop year.
3. Cereals and coarse grains not all bearish
Record global supplies of wheat bring downward pressure, yet there are opportunities for Canada: the lack of high protein wheat in the world. And supplies are not as tight as it appears if Chinese production is taken out of the equation.
Global corn supply is abundant, but use remains robust - particularly in China where corn use is growing in feed, food, and industrial use. Biofuel policy in China is also on the radar as they are considering implementing a E10 ethanol policy. This constitute a huge boost to corn demand.
How will these outlooks impact Canadian agriculture?
Given recent actions by the Indian government on peas and lentils, we could see a shift to more acres of soybeans and canola from peas and lentils in 2018. The good news is that global oilseed demand is strong enough to absorb increased Canadian production of oilseeds. It also highlights our competitive advantage and flexibility of our diverse crop mix. Many things can happen in the grain world between now and seeding time. Check back with us in January when we release our 2018 Canadian Agriculture Outlooks.
Leigh joined FCC in 2015 as a Senior Agricultural Economist, specializing in monitoring and analyzing FCC’s portfolio, industry health, and providing industry risk analysis. Prior to FCC, he worked in the policy branch of the Saskatchewan Ministry of Agriculture. He holds a Master of Agricultural Economics degree from the University of Saskatchewan.