Canada wheat exports plummet 4% in TY 2019/20 despite increase in quality

CANADA – Canada’s wheat exports ended trade year (TY) 2019/20 down four percent below the previous year despite remarkable improvement in quality during the same period, a recent United States Department of Agriculture (USDA) report has shown.

USDA noted that despite the overall decline in Canadian wheat exports, demand for the grain has significantly risen since March.

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Exports for the months of April through August were up 33 percent over the three-year average riding on the back of less competition for rail service.

Durum exports surge

In TY 2019/20, USDA data shows that Canada exported 5.1 million metric tons (MMT) of durum on a 5.0 MMT crop, bringing durum ending stocks to their lowest level in years.

Exports of durum were driven up by purchases from Italy, Morocco, and Spain which combined accounted for more than 55% of total Canadian exports of the variety.

Improving quality and yield

In terms of quality and yield, preliminary data from the Canadian Grain Commission and Statistics Canada suggest producers had excellent growing and harvest conditions.

Yields are forecast by US Foreign Agricultural Service to reach 3.4MT/HA, approaching record levels.

Growing conditions have been very good in most growing regions and, thus far more, than 80 percent of wheat and durum attained No 1 or 2 quality grades.

Dryness for instance, began in September, allowing wheat and durum to mature early and be taken off the field before frost arrived.

 However, fall and winter precipitation will be needed to replenish the soil and water reserves for the next crop.

The Covid-19 experience

When it comes to resilience during the pandemic, Canadian Wheat and durum have performed well supported by sustained demand and resilient prices.

When averaged across MY 2019/20, the COVID-19 pandemic did not contribute to a significant change in the quantity of wheat milled in Canada.

Increased household purchases of flour and products made from flour and semolina is estimated to have helped offset the decline in restaurant usage in the first three months of the pandemic, until panic buying ceased.

Production was also not affected with inputs such as fertilizer and on-farm chemicals remaining available throughout the entire period.

Rail transportation has been operating in grain producers’ favor due to decreased competition from petroleum, and processing facilities have remained open without interruptions to labor supply.

As a result of these factors, USDA observed that record yields of wheat and durum are being observed in 2020 with majority of wheat maturing early this fall thanks to very hot and dry August weather.

TY2020/21 forecast

Although still very early in TY 2020/21 data from the Canadian Grain Commission indicate relatively strong wheat (excluding durum) exports shipped out of Canadian ports through the week ending October 11, 2020.

Exports of durum began TY 2020/21 on strong footing as well and is expected to drive growth in Canadian exports during this period.

Particular increase in durum wheat demand from Italy, Morocco and Spain is projected to be critical in Canadian exports in the TY 2020/21.

 Industry sources share that the increased demand from Italy is due to a shortage of high-protein durum

Strong demand from China, as well as purchases from Bangladesh and Peru are also expected to boost exports in the first quarter of the trade year.

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