The agriculture and agri-food sector is a major contributor to the Canadian economy. It is one of the sectors with the highest economic growth potential in the country. The success of the Canadian agriculture sector depends heavily on their ability to export. Canada is the fifth-largest exporter of agri-food and seafood in the world, exporting to over 200 countries.

Abundant land and water resources, access to international markets, strong research and development capacity, strong global reputation as a trusted supplier of safe, top-quality food and strong stewards of the land are Canada's key advantages in sustainable food production and processing.

Canada’s grain sector is a major driver of economic growth domestically, with demand for Canadian export grain products on the rise from global markets. Canadian grains are in demand around the world because of their quality, nutrition and value. Canada is a leading global exporter of grain and holds the position as the world’s largest exporter of durum wheat and oats.

Wheat, oats and barley are planted on almost 14 million hectares each year, producing almost 46 million tonnes of food each year. Over the last five years (2017-2021) Canada’s exports (grain and products) account for:

•83% of durum production

•69% of non-durum wheat production

•67% of oat production;

•33% of barley production

The Canadian grain industry generated a record $32.2 billion in farm cash receipts in 2021, with exports also setting a record by value at more than $24.5 billion. Wheat is Canada’s largest field crop grown. Canadian wheat is shipped around the world to over 84 countries. 

Grain markets continue to face a period of uncertainty and volatility. COVID-19 had resulted in transportation labor shortages and high transportation costs. Markets are now challenged by tight world grain supplies due to the widespread drought in North American grain-producing areas in the summer of 2021, lower stocks in major exporting countries, reduced supply from the Black Sea, and export restrictions and embargoes impacting the trade and prices of grain and fertilizer. Therefore, Canada's grain supply this season is important for world food security.

“Tight global wheat supplies could get a needed boost as Canadian farmers are expected to sharply increase acreage for spring planting. A robust crop in Canada, the world’s biggest producer of spring wheat, would help alleviate worldwide shortages sparked by Russia’s invasion of Ukraine,” says Gro Intelligence in its reports published on 27th April.

For 2022‑2023 season, Canadian producers are expected to react to the strong prices in the market by maximizing acreage planted and assuming a return to trend or just below trend yields, total field crop production and supply is expected to return to a more normal level. Dry conditions remain however, particularly in the southern and central portions of the western Prairies where timely precipitation this spring and throughout the growing season will be needed to achieve trend yields. Record low carry-in stocks combined with a significant increase in exports are expected to result in carry-out stocks remaining relatively tight.

WHEAT PRODUCTION

According to the U.S. Department of Agriculture, production of wheat, corn, barley and oats is forecast to increase 30 percent to 58 million tonnes (mt) in 2022/23 season over last season. The most significant downside risk to this outlook is the persistent drought conditions in Alberta and Western Saskatchewan, which are primary cereal-growing areas in Canada. 

While winter wheat was the second most prevalent wheat type produced in Canada in 2021/22 season (after spring wheat), USDA’s Ottawa post predicts that a return to trendline yields will mean that durum wheat will again become the second-most widely grown wheat in Canada, reducing winter wheat to third place in 2022/23. Durum area as a share of total wheat area has been fairly stable over the past twenty years, ranging between 15 percent and 26 percent of total wheat area, depending on prices. Durum is primarily grown in southern Saskatchewan, where soil and climate are typically most suitable.

For 2022-23, total durum wheat supply is projected to increase 75% due to an increase in seeded area and a gradual return to average yields. Canadian durum wheat production is pegged at 5.52 mt. Durum wheat exports are expected to increase to 4.3 mt, about 72% of supply, led by import demand from North Africa where poor climatic conditions are expected to negatively impact the region’s supply. Domestic use is forecast to return to average levels at 0.9 mt, and carry out stocks are forecast to double to 0.9 mt.

For 2022-23, total wheat supply (excluding durum) is projected at 29.04 mt, up 20% compared to the previous year, with an increase in seeded area and a return to trend yields. Production is pegged at 25.64 mt, 35% more than the previous year.

Exports are forecast to increase on increased domestic supplies. Further, the distribution of Canada’s wheat will likely change, as a result of Russia’s invasion of Ukraine, if Ukraine is unable to harvest its winter wheat crop. Countries such as Indonesia, Bangladesh, Morocco, and Tunisia typically depend on both Ukraine and Canada for their wheat supplies. From Canada, these countries import Canadian Western Red Spring (Bangladesh, Indonesia, Morocco) and Canadian durum (Indonesia, Morocco, Egypt, Turkey, Tunisia), while they import primarily winter wheat from Ukraine.

Canada’s winter wheat is most commonly sold in the Americas, but strong demand for mid-/low-protein wheat in the Middle East, North Africa, Sub Saharan Africa, and South Africa may lead to diversification of winter wheat exports to these regions in 2022/23 season.

Statistics Canada revised up wheat exports slightly to 17.25 mt, that is about 59% of total supply, under expectations of increased global demand following declining supply and trade from the Black Sea region. Closing stocks were trimmed 0.3 mt, now forecast at 3.8 mt, still up 15% compared to the previous year.

BARLEY PRODUCTION

For 2022-23, the Canadian barley outlook is for sharply lower carry-in stocks, a slightly smaller area, better yield, larger production and supply, greater domestic use and exports, higher ending stocks and a lower average price. Total barley supply is projected at 10.95 mt, 40% higher than 2021-22 and the fourth highest since 2010. This is largely due to a 52% increase in the production forecast, assuming a return to normal weather conditions and trend yields for the 2022 growing season, and average abandonment rates on the Prairies. 

Barley exports are forecast to increase on increased domestic supplies. China has become an important buyer of Canadian feed barley in recent years. Although demand from China can be unpredictable, the country has consistently purchased between 1.4 and 3.3 mt each marketing year since 2018.

CORN PRODUCTION

For 2022-23, Canadian corn outlook is for a smaller supply, lower demand and ending stocks, as well as lower average price. Corn planted area is forecast to increase marginally, while production is forecast to decrease slightly because yields are projected to decline from record rates and return closer to trendline yields. Planting decisions will be guided by high crop prices, but also high input costs. Several analysts suggested that some farmers may switch from corn to soybeans this year to save on input costs. Corn is a high-input crop, requiring more fertilizer than alternative crops (e.g., soybeans, wheat) grown in Canada’s leading corn-growing province of Ontario.

Canadian corn supply is projected to decrease by 12% from 2021-22 to 17.8 mt, based on projections for a 1% reduction in carry-in stocks, a 3% drop in production and a 33% fall in imports. Total domestic demand is projected to decrease by 13% from 2021-22, mainly reflecting lower feed demand in Western Canada. Industrial use is projected to increase. Exports are expected to be at an average level. Carry-out stocks are projected to decrease from 2021-22 and to the lowest level since 2015-2016.