Grain, oilseed and pulse commodity prices should remain strong throughout 2022, buoyed by low national and global supply which was amplified by last year’s drought in Western Canada, Farm Credit Canada’s (FCC) latest economic outlook.
“There is plenty of optimism for this sector looking at the year ahead; however, two of the biggest economic trends that could impact profitability are rising crop input costs and the impact of global political tensions on trade,” J.P. Gervais, FCC’s chief economist, says in a news release about the outlook.
These elevated prices mean seeded acres of soybeans and canola are projected to climb in 2022, while corn acres are likely to come down due to the high cost of fertilizer. The price of fertilizer skyrocketed last year and is anticipated to stop increasing at a fast pace, but nonetheless remain elevated, the release notes.
The cattle market is also signalling strong prices, the release says. The number of fed cattle in 2022 is forecast to decline and because of high feed costs, fed cattle will likely be marketed at lower weights, causing volume by weight to decline.
Consumer appetite for dairy products grew in 2021 but not to the expected level. With the increasing costs for feed and energy, the Canadian Dairy Commission is increasing the support price for butter. While the dairy farm price is expected to experience an increase, milk output at the farm level could see only limited growth.
After strong growth in hog receipts in 2021, there’s limited growth potential for 2022. Hog prices are projected to decline slightly and with marginal growth in production, the release notes. High feed prices will challenge profitability and may hinder production growth.
“While the long-term outlook for Canada’s ag and food industry is positive, there are many factors to keep in mind as operations make their plans, including input costs, trade tensions, variable weather and changing consumer behaviour,” Gervais says.
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