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Canada Agribusiness Report Q3 2009
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Canada |
Published |
29 June 2009 |
Number of Pages |
54 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Canada's 2009 wheat crop is estimated to be up 42.87% year-on-year at 28.61mn tonnes
In the new Canada Agribusiness Report for Q3 2009, we begin to look at the outlook for the 2010 harvest. Next year we expect production of grain to fall back from the high levels estimated for 2009.
This year a bumper wheat crop in Canada and its southern neighbour the US has put pressure on prices.
Prices were already suffering from flagging demand owing to the poor state of the livestock industry in the two countries and sluggish demand on the export market. In 2010, we expect only a small recovery in prices despite a forecast large fall in production on both sides of the border.
The 2009 wheat crop is estimated to be up 42.87% year-on-year (y-o-y) at 28.61mn tonnes. This was due to excellent growing conditions causing yields to rise and a 15% increase in the planted area in response to the high wheat prices at planting time in H108. For the 2010 crop, despite an expected similar area planted to wheat, production will fall owing to a drop in yields to more normal levels.
Barley and soybean production also benefited from the good growing conditions in the 2009 crop year.
Barley production grew an estimated 7.3% y-o-y despite a 14% fall in the area planted. Soybean production rose by 23.8% y-o-y to an estimated 3.34mn tonnes. Exports of soybeans rose by a far smaller amount, however, owing to low beginning stocks. As with wheat, we expect production in 2010 to fall back again as yields drop.
In the coming years, we expect to see demand for grain and oilseeds in Canada to be boosted by biofuel production. Production capacity for both ethanol and biodiesel has been rising rapidly over the past few years. Increases in capacity have been slowed this year by tight credit conditions and the fall in the price of oil. Towards the end of our forecast period in 2013, however, we expect biodiesel to become a more significant driver of growth in demand for crops.
As in the US, Canada's livestock and dairy sectors are still struggling. We expect production of poultry, pork and beef to fall. We also forecast a fall in production of dairy products. Canada's hog sector had already been struggling before the rocketing feed costs of 2008 and the fall in demand this year. The outbreak of H1N1 'swine flu' has been a further blow to the sector at a time when it looked like hog prices could begin to rise again owing to lower supply. Hog inventories continued to fall through the first half of 2009 as more operators left the business. We do not see the situation improving through the second half of the year. Assuming growth returns to the economies of Canada and the US next year, rising demand and lower supply could see prices rise again and profitability return to the sector. It will take time, however, for herds to be built back up and we see production falling for some years to come.
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