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2023 Focus: Canada will be a major wheat supplier in the first half of the year

 Last Update: 2023-02-02
 Source: Internet
 Author: User

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Foreign media news on December 27: Canada's wheat production in 2022 is close to an all-time high, while the decline in supply from major producing countries such as Argentina, the United States and the European Union will help Canada become the world's main supplier in early 2023
.

Canada harvested 33.
8 million mt of wheat in 2022/23 (August to July) due to improved weather, up 51.
5% year-on-year, which will make Canada a major exporter
in the Western Hemisphere, according to Statistics Canada.
The increase in production was partly due to the increase in sown area, as wheat was in tight supply and attractive prices during the planting period
.

Canada's wheat exports are also expected to surge
in 2022/23 due to a significant increase in wheat production.
Agriculture and Agri-Food Canada expects Canadian wheat exports of 23.
5 million mt in 2022/23, up from 15.
1 million mt the previous year.

While Canada's production outlook looks strong, wheat production in some regions is worrying
.
Statistics Canada cut its wheat production forecast by nearly 1 million tonnes this month due to dry weather in parts of the prairies, but that won't have much impact on Canada's wheat export outlook as global demand for Canadian wheat is likely to increase
.

Weather issues have darkened production prospects for Argentina and the United States, which are major wheat suppliers to Latin American and East Asian markets
.
In the United States, winter wheat conditions are a concern
due to unusually dry conditions over much of the central and southern Great Plains.
As of Nov.
29, U.
S.
winter wheat was only 34 percent good, down from 44 percent
a year earlier.

In addition, U.
S.
wheat export sales have declined
.
U.
S.
wheat export sales totaled 14.
1 million mt in 2022/23 as of Dec.
8, down 7%
year-on-year, the USDA said.

Exports to China increased

In the first three months of 2022/23, China imported 1.
1 million mt of wheat from Canada, far higher than the 700,000 mt
imported in the whole of 2021/22.

Singapore traders said China is likely to continue sourcing wheat
from Canada as it eases pandemic restrictions.

In addition to Asian countries, Canada is likely to increase exports
to the South American region due to reduced wheat production in Argentina.

Argentina is likely to harvest 11.
8 million mt of wheat in 2022/23, down from 23 million mt
in the previous year.
The USDA expects Argentina to export 10 million mt of wheat in 2022/23, down from 16.
3 million mt the previous year.

Supply concerns in Australia

Concerns about a lack of supply of high-quality wheat from Australia could also boost demand
for Canadian wheat.
Canada and Australia are both major producers of high-protein wheat
.

Australia, the world's sixth-largest wheat producer and fifth-largest exporter, is likely to see a significant increase in wheat exports, but supplies of high-protein wheat are expected to decrease
.

Traders expect the share of Australian milling wheat to decline
in 2022/23.
However, the proportion of milled wheat and forage wheat remains unclear
until the wheat harvest is completed.

Black Sea wheat trade

Canadian wheat may face competition in the global market, as Russia offers wheat
at lower prices in different regions.
Interest in Russian wheat has increased
since Russia reported a bumper wheat harvest in July and made export tariffs less onerous.
After the outbreak of the Russian-Ukrainian conflict in February, many international traders were reluctant to buy wheat
from Russia due to difficulties in arranging financing, insurance and transportation.
Since July, Russian exporters have regularly offered the lowest offers to major wheat importers in the Middle East and North Africa, such as Egypt's state purchasing agency GASC
.

The USDA expects Russia's wheat production to rise 21 percent from the previous year to 91 million mt in 2022 and expects Russia's wheat exports to increase by 10 million mt to 43 million mt in 2022/23, accounting for one-fifth
of global trade.
Russia is facing an oversupply problem, traders said, as exports slowed due to its bumper wheat harvest, so Russia is trying to sell wheat
at lower prices.
This could create stiff competition
for Canadian wheat.
Russia has also been offering wheat
at lower prices in the Asian market.

Wheat prices fluctuate

Over the past year, Canadian wheat prices have fluctuated sharply as global wheat supplies tightened in February and prices rose steadily, reaching a record $541.
79/mt
on May 17.
The resumption of grain exports through the Black Sea in Ukraine following the Black Sea Grain Initiative at the end of July, led to a sharp retreat in Canadian wheat prices, followed by a flattening
by the end of the year.

Canadian West Red Spring Wheat (CWRS) basis quotes reached a year-high of 151 cents/bushel in February, before reaching a low
of 59 cents/bushel in May.
However, Canadian wheat FOB prices are likely to rise in the coming months as demand for Canadian wheat is likely to
increase around the world.

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