Canada Soybean Market – MY 2022/2023 Overview
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Canada’s Soybean Production to Exceed Initial USDA Forecasts for the MY 2022/2023
In the MY 2021/2022, Canada’s Soybean production declined by 87 kmt YoY, primarily due to a 30 kha YoY decrease in harvested area and a 0.1 mt/ha drop in yields. For the MY 2022/2023, the USDA initially estimated Canada’s Soybean production to decrease to 6 Mmt. However, the February 8th forecast revised this estimate upwards to 6.5 Mmt, partly due to a 0.12 Mmt increase in harvested area. Despite modest production levels, Canada holds a significant position in the Soybean export market, ranking as the fourth largest exporter worldwide in 2022, after Brazil, the U.S., and Argentina. Therefore, how did Canada’s Soybean exports occur at the beginning of 2023?
Figure 1: Canada’s Soybean Production (MY 2019/2020 – 2022/2023)
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Canada’s Soybean Exports Increase YoY in Early MY 2022/2023
In the MY 2021/2022, Canada’s Soybean exports reached 2.5 Mmt, 1.8 Mmt higher YoY, despite an 87 kmt decrease in production YoY. Most of these exports occurred in Sep and Oct 2021, when exports reached 0.75 Mmt and 0.6 Mmt, respectively. At the beginning of the MY 2022/2023, exports reached 2.3 Mmt between August 2022 and February 2023, a 0.24 Mmt increase YoY. Most of these exports occurred between Sep and Dec 2022 and reached 2 Mmt, 0.02 Mmt higher YoY. Meanwhile, In Feb 2023, Canada’s Soybean exports reached 0.06 Mmt, 0.19 Mmt lower MoM. What are the major destinations for Canada’s Soybean exports in January and February 2023?
Figure 2: Canada’s Soybean Exports (MY 2020/2021 – 2022/2023)
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China Leads Canada’s Soybean Exports in Early MY 2022/2023
In the MY 2021/2022, Canada’s leading destination for Soybean exports was Iran with 0.4 Mmt, followed by the Netherlands with 0.3 Mmt and Italy with 0.26 Mmt. However, at the beginning of MY 2022/2023, China has taken the lead as the leading destination for Canadian Soybean exports, reaching 1.13 Mmt and increasing by 0.9 Mmt YoY between Aug 2022 and Feb 2023. Algeria follows with 0.37 Mmt, which is 0.12 Mmt higher YoY. Meanwhile, Canada’s Soybean exports to Iran decreased to 0.34 Mmt, 84 kmt lower YoY. Nevertheless, Iran’s Soybean imports from Brazil increased by 459 kmt YoY during the same period. Therefore, how do Soybean FOB prices compare between Canada and Brazil in the MY 2022/2023?
Figure 3: Canada’s Soybean Destinations (January 2023)
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Canada’s Soybean FOB Prices Remain More Competitive Than the U.S. and Brazil
Canada’s Soybean FOB prices reached USD 614/mt on average, in June 2022. However, they remained USD 55/mt and USD 37/mt lower than U.S. and Brazil’s prices, respectively. At the beginning of the MY 2022/2023, Canada’s Soybean FOB prices decreased to USD 503/mt in Oct 2022, USD 58/mt lower YoY and USD 92/mt lower than US and Brazil’s prices on average. In Feb 2023, Canada’s Soybean prices increased to reach USD 552/mt, USD 19/mt higher YoY. Yet, they remained USD 50/mt and USD 12/mt lower than the U.S. and Brazil’s Soybean FOB prices on average. Despite Canada’s Soybean production being lower than the U.S. and Brazil, its Soybean FOB prices remain the lowest in the MY 2022/2023. Thus Canada is the most competitive origin compared to the U.S. and Brazil, so far.
Figure 4: Brazil, Canada and U.S. Soybean FOB Prices (Aug 2021 – Feb 2023)
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In a Nutshell
The USDA’s new Soybean production estimates for Canada are higher than Initial estimates, which makes Canada’s Soybean production 2 Mmt higher YoY. Canada is a significant Soybean exporter despite lower production volumes than the U.S. and Brazil.
At the beginning of the MY 2022/2023, Canada’s Soybean exports are 0.9 Mmt higher YoY between Aug 2022 and Feb 2023, with China as the main destination. Meanwhile, despite Iran being the main destination for Canada’s Soybean in the MY 2021/2022, Iran turned to Brazilian Soybean at the beginning of the MY 2022/2023. And decreased imports from Canada by 84 kmt YoY between Aug 2022 and Feb 2023.
Canada’s Soybean FOB prices remain more competitive than the U.S. and Brazil, despite Canada’s lower production. Thus, will Canada’s Soybean prices remain lower for the rest of 2023?
