Canada Sees Supply of Main Crops Dropping 26% on Drought Impact

(Bloomberg) -- Canada, the world’s biggest canola grower and a major wheat producer, forecasts a 26% drop in supplies of its main crops as drought ravages output and inventories shrink.

Grain and oilseed exports are expected to fall in the marketing year that started Aug. 1 for most crops, and inventories will drop due to low supplies, Agriculture and Agri-Food Canada said in a monthly report on Thursday. By the end of July, nearly three quarters of Canada’s agricultural area was abnormally dry or in a drought.

Erratic weather globally is helping push prices of staple crops including wheat to multiyear highs. The outlook for the sharp drop in Canadian supplies also comes with a forecast for the nation’s grain prices to remain high at a time that food inflation is already being felt in consumers’ wallets. 

Still, as Canadian farmers harvest their crops, there is “significant uncertainty” regarding yield and production estimates, the government said. Total supply in principal field crops is expected to fall sharply “due to the low level of carry in stocks combined with lower production.”

Canada is forecast to harvest 71.8 million metric tons of all principal field crops this year, down 27% from 2020-21. Total supplies will tumble to 85.4 million tons while inventories at the end of the year are pegged at 6.7 million tons, down 36%.

Canola production is seen at 15 million tons, down 20% from last year, while Canadian farmers are expected to harvest 20.2 million tons of wheat, down 43%.

©2021 Bloomberg L.P.