Ag Canada boosts non-durum wheat export estimate

Agriculture Canada has dramatically increased its 2023-24 non-durum wheat export estimate in its latest supply and demand report.

“Exports are raised 11 percent from last month’s report to 20 million tonnes, as Canadian wheat continues to move swiftly to international markets,” it said in its Dec. 15 report.

That is an extra two million tonnes heading out the door.

But production was increased by 2.13 million tonnes. The new ending stocks estimate of 3.5 million tonnes is higher than November’s forecast of 3.2 million tonnes.

Analysts had been calling for a higher export number based on a strong early-season sales program.

Canada exported 7.9 million tonnes of non-durum wheat through week 19 of the 2023-24 crop year, according to the Canadian Grain Commission.

That is well above last year’s pace of 7.04 million tonnes.

Shipments were well above the pace needed to meet Agriculture Canada’s previous export target of 18 million tonnes.

“We’re off to a very strong pace this year,” said MarketsFarm analyst Bruce Burnett.

“It certainly has been the leader this year in terms of offshore demand for Canadian crops. It is very impressive.”

Exports by country are broken out monthly, with the latest data being for October.

China has been the biggest buyer through the first three months of the 2023-24 campaign, purchasing 536,400 tonnes of Canadian non-durum wheat.

That is about half as much as the same time last year, but last year was an unusually large program.

China has been buying a lot of U.S. soft red winter wheat lately, likely to replace its domestically grown wheat that suffered quality damage because of excessive harvest rainfall.

Indonesia has been Canada’s second biggest customer, purchasing 532,900 tonnes, a 164 percent increase over the same period a year ago.

“They’ve been significant importers in the past, so it’s not a surprise they’re at the levels that they’re at,” said Burnett.

He thinks it has a lot to do with the poor U.S. hard red winter wheat crop. They need some good quality wheat.

“We benefit from that on the spring wheat side,” he said.

But the big surge also has something to do with last year’s dismal performance.

“Last year’s exports were the lowest in 10 years to Indonesia, which is why this year-on-year looks crazy good,” he said.

Burnett believes last year’s sales were down because of Australia’s record crop, which provided fierce competition in Indonesia along with Russian and European Union wheat.

There have also been good sales to other markets in Asia, Latin America and West Africa. Demand for Canadian wheat has been robust this year despite Russia’s massive crop.

The United States is a good case in point. It bought 227,300 tonnes of Canadian non-durum wheat in the first three months of the campaign, up more than five-fold from a year ago.

That is once again because of the poor U.S. HRWW crop.

“Domestic mills in the U.S. have been using more spring wheat and that includes more Canadian wheat,” said Burnett.

Minneapolis wheat futures prices have been on “a one-way ticket ride down” since the end of July, seemingly ignoring the strong demand for spring wheat.

Outside money appears to be ignoring the fundamentals and maintaining its strong short position in the market.

But the basis has been strong so far this crop year and he anticipates that trend continuing as supplies get tighter, unless the futures market wakes up and there is a major reversal in that short position.

If that happens, the basis levels will soften.

Tags: Agriculture Canada, non-durum wheat, export, estimate, Canada, ending stocks, Production, wheat