2020 was a year unlike any other for so many reasons. In Canada, the overall production of grains, oilseeds and pulses was a record high, with most crops (except canola) seeing year-over-year (yoy) production gains. We project that most Canadian grain, oilseed and pulse prices will continue to benefit from tight global supplies and strong world demand (Table 1).
The year-to-date crop prices (except for durum) are better than the annual 20-21 forecast. It’s a strong reflection of the major surge in commodity prices that started early in the fall of 2020. For the most part, prices for the 21-22 marketing year crop are projected lower, but still expected to be higher than their respective 5-year averages.
Farm input prices on the rise
With higher crop prices expected in 2021, each crop supply is forecast to increase in most cases. That will drive higher demand for fertilizer, causing a surge in prices for urea, ammonia phosphate and potash.
Other crop input prices (e.g., seeds and pesticides) will also likely increase ahead of planting in the spring, softening crop margins. The 2021 soybean-corn ratio, based on November 2021 soybean to December 2021 corn futures prices, suggests U.S. farmers will favour soybean over corn acres. That competition for acres will directly influence nitrogen demand and fertilizer prices.
Farmland values are expected to stay elevated throughout 2021 due to the low interest rate environment and strong 20-21 crop receipts. Check back with us in March for the 2020 FCC Farmland Values Report results and our expectations about trends in rental rates and land affordability.
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