What Will 2023 Bring?

As we roll into the spring following one of the best crops in decades, one thing is for certain, prices are coming down. Most, if not all, commodities are already significantly lower priced than they were in the fall, and this is likely to lead to some interesting seeding plans this spring. Let’s take a minute to break things down on the different crops to assist in planting and marketing decision-making.

We may as well start with canola, as it is the big player here on the Prairies. With prices still holding in the $18 to $20 range, or higher for specialty canola such as Nexera, we can be very confident that acres are going to climb this spring. If we manage to produce an average, or above-average canola crop on these acres, we will more than likely see prices fall back into the lower to mid-teens by fall. Demand for canola may be climbing, but we are not likely to see the increased crush capacity locally coming online for a while yet, and that could put us into an oversupplied situation, leading to both softer prices and increased carryout next year, both of which could be concerning longer term.

Next after canola always comes wheat. We had a pretty decent wheat crop here on the Prairies this year and prices have held up well all things considered. With fall pricing still at or above $10, it won’t surprise anyone to see wheat acres holding strong this spring. With the winter wheat crop in the U.S. not looking fantastic at this point, there may be an upside opportunity to wheat prices, even if we increase acres and have good production here in Canada. There are also other trouble spots around the world, so we do see good potential in the wheat market over the next 18 months.

The oat market is likely the one that has been hit the hardest by this year’s crop. With acreage up significantly and yields above average on most farms across the land, supply is just far too burdensome even with the rising demand numbers. We are looking at a potential carryout in oats of well over a million metric tonnes, over double the five-year average of just over a half million tonnes. These numbers will all contribute to keeping oat prices down in the $4 to $5 range, well below what we have seen in recent years. That will also force farmers to cut oat acreage back, and the trade is now estimating a reduction of 20 to 30 per cent across the Prairies. More than likely this will take production back to a near normal level and we will see prices come up a little into the early part of 2024.

One of the big question marks going into this spring seems to be barley, and where that market is heading. Prices today are relatively strong, but new-crop values have been difficult to acquire. Many longtime malt barley farmers are becoming a little concerned with the delay, stating that they have never waited this long to get their new-crop contracts. One has to assume that the big crop in the bin has something to do with these delays, as maltsters will be reluctant to contract too early if there is still a good supply in hand. The feed side of the barley market is even more unsure, as rarely do the feed buyers put much of a position on too early in the year.

Lastly, I want to quickly touch on the flax market, which has been very soft so far this year. Canadian flax production was up 37 per cent over 2021 this year, leading to a significant reduction in prices. However, values are still at traditionally high levels, making flax a profitable crop to plant this year. With a projected drop in flax acreage being reported by Agriculture and Agri-Food Canada, it may be a great time to seed a little extra flax and take advantage of a market that should strengthen in the new year!

Until next time…

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