Global Markets: Wheat – Record Canadian Exports Forecast from Near-Record Crop

Photo: Texas AgriLife Extension

With favorable weather and larger area, Canadian production is forecast at near-record levels, supporting exports at a record 25.0 million tons, accounting for 13 percent of total global exports. For the 2020/21 crop, Canadian farmers expanded area for both winter wheat and durum, based on strong prices. The logistical constraints for this year’s exports are expected to be limited compared to the challenges the country faced after its record crop in 2013/14 when a frigid winter and competition for rail transportation constrained exports.

Over the past decade, Canada has expanded its exports particularly to markets that favor its high protein spring wheat. Indonesia is the world’s second-largest wheat importer and continues to increase its purchases of Canadian milling wheat. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) enabled improved Canadian access to the Japanese market.

Despite being a major producer and exporter, the United States is also a major importer of Canadian wheat, wheat flour, and products. Over the past few years, China has also emerged as a key buyer, and its imports overall are now expected to rise to 7.0 million tons in 2020/21. Italy is a major buyer of Canadian durum for pasta products.

The high-quality wheat market is expected to face intense competition in the coming year with Australian exports also rebounding. Higher demand from some of the key global buyers such as Indonesia and China will help support the overall Canadian export forecast.

Pakistan Wheat Imports Rising

Pakistan 2020/21 wheat imports are forecast at their largest in over 11 years at 1.0 million tons, driven by robust demand and favorable import policies. Pakistan removed the 60 percent import duty in June amid domestic uncertainties regarding supply.

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Lower carryin from the previous year and reported locust infestations have incentivized more import-friendly policies to help bolster dwindling domestic supplies and manage a significant rise in domestic wheat prices year-over-year. Domestic supplies had also been trending lower partly due to subsidies which incentivized large exports in 2017/18 and 2018/19.

Surging domestic wheat prices have also driven greater import demand. Compared with the previous year, prices reported by FAO (Food Agriculture Organization) for Karachi wheat in June 2020 were more than 15 percent higher at 45 rupees per kilogram. In the August 2020 publication of the Bureau of Statistics Monthly Review on Price Indices, wheat prices had surged over 40 percent compared with the previous year for urban and rural households (separate price indices).

Flour prices had climbed more than one-fifth compared with the previous year – high internal prices for both wheat and wheat flour have helped drive demand for competitively-priced foreign supplies of wheat.

Higher relative prices and domestic supply concerns have encouraged government and private entities to have bought reportedly over 700,000 tons thus far for 2020/21, reflecting Pakistan’s strongest-expected import demand in over a decade.

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