Falling commodity prices to pressure margins in Canada

Oil & Fats

Canada

Market & Price Trends

Published Mar 7, 2024

Tridge summary

A market report from Farm Credit Canada predicts a drop in input prices for the 2023-24 and 2024-25 crop years, which will partially offset lower prices for many agricultural commodities due to increased global and US corn supplies, production, and imports. However, Western crops may face more margin pressure. Factors to monitor include global stocks-to-use ratios, weather forecasts, and equipment costs. Meanwhile, historical drought data reveals the impact of dry conditions on Saskatchewan’s canola and wheat yields, with significant effects in 2021 and 2023. Rising equipment costs due to supply chain issues and inflation, along with interest rate hikes, are adding financial strain on grain and oilseed operations.

Disclaimer: The above summary was generated by a state-of-the-art LLM model and is intended for informational purposes only. It is recommended that readers refer to the original article for more context.

Original content

Falling input prices feature in the 2023-24 and the 2024-25 crop years, partially offsetting lower prices for many ag commodities, according to a recent market report from Farm Credit Canada (FCC). There’ll be more margin pressure, especially for Western crops, than the sector has seen recently. This year, we’ll be watching global stocks-to-use ratios, global weather forecasts and equipment costs as three significant influences on crop profitability. Commodity prices for the 2023-24 marketing year (MY) have fallen year-over-year (YoY), but for corn, spring wheat, and feed barley, they may already have bottomed out. Canadian feed barley prices have been pressured by the availability of relatively cheap US corn and lack of export demand and Canada’s barley carryout is expected to be in line with the five-year average. However, low supplies due to drought-related yield reductions on the prairies will help to boost prices for the new MY and keep them well above the five-year average. ...

Source: Thepigsite