Canadian Organic Grain Export

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In this second article on export markets from Grain Insights, we examine the indications of a possible slowdown in 2023 by comparing the export data of this year with that of 2022. We also delve into the export markets of grains not covered in our first newsletter, namely: barley, oats, and corn.

Comparison 2022-2023

The prevailing theme in recent observations of the organic grain market is a deceleration. Insights gathered during late Fall indicated lower-than-anticipated movement in 2023, extending into the early part of 2024. A portion of this decline in exports can be attributed to a reduction in the number of organic producers in the Prairie region rather than to a loss of markets per se. Additionally, organic markets worldwide are currently disrupted by the residual effects of the COVID-19 pandemic. The decrease in certain exports can also be attributed to an increase in demand from Canadian processors of organic grains (see this article for more information).

While we currently have data for 2023 only from January to October, we wanted to verify this assumption and see how 2023 exports of organic grains compared with 2022. In order to do so, we did an average of monthly export in value and volume by crops for 2022 (12 months of data) and for 2023 (9 months of data). The graphic 1 below, showcases 13 crops tracked by the Canadian Government via Harmonized Codes.

The results might bring some nuances to the conversation. In 2023, volume and value decreased for 8 out of the 13 tracked crops compared to 2022, while 5 crops experienced an increase. Overall, the increases in volume and value of certain crops did not compensate for the decline of the others: we have an average monthly trade deficit for organic grains, oilseeds and pulses of $430,657 in value and of 1,080 in volume (MT) from 2022 to 2023.

Graphic 1:Comparison of the monthly average of the value and volume of Canadian organic grain exports by crop type from 2022 and 2023.

In the graphics above, we observe declines in volume for soy of 8% and for corn of 16% compared to 2022. During the “market day” of the Association of Organic Grain Producers of Quebec, many soy buyers told us that they were not ready to commit for the 2024 growing season contract and might not be until spring (late March) due to the current market conditions for soy intended for human consumption. Currently, soy buyers in the East still have some inventory from 2022/2023 for food-grade soybean that they are trying to liquidate before entering into contracts for the new season crops. The feed market, according to them, is stable: some Quebec grain merchants are buying at this moment. As for corn, they reported little-to-no movement for food-grade corn.

The export volume of green/French organic lentils, red lentils, and other types also decreased in 2023 (approximately -20% of the monthly average volume in 2023 compared to the previous year). As mentioned in our article last November (link), this year's drought and the invasion of grasshoppers have impacted the quality and quantity of lentil harvest in the Prairies. Consequently, there is a loss in the lentil inventory in Canada, and the decline in exports could continue until the 2024 harvests. Regarding peas (excluding the yellow category), we observed a 45% decrease in volume and a 29% decrease in export value.

In 2023, we have seen positive movement for the following crop: Red Spring Wheat, Oat, Durum Wheat, Flax and Barley.

• For Red Spring Wheat, in the first 9 months of 2023, we sold 86% of the volume of 2022. If we look at the monthly average, we sold 14% more volume in 2023 compared to 2022. Durum wheat, which was the 7th largest crop export in the first 9 months of 2023, had its average monthly export increase by 76% in value and double in volume in the last year.

• For oats, we exported more in value for the first 9 months of 2023 than in the entire year of 2022. However, in volume we exported 75% of the amount of 2022. Which means that we might expect similar export volume in 2022 and 2023, but value will be higher because of a slight price increase.

• Specialty crops: Flax and Barley both saw an important surge in 2023. Both monthly average volume and value increased by 71% for barley in 2023. As for flax, the export is at a record high for the past 5 years. It has increased by 217% in value the first 9 months of 2023 compared to 2022 and the volume more than doubled in the same period of time.

In the next section of this article we will review the export profile of 3 crops that were not covered in our first newsletter (see previous article detailing information on wheat, lentil, flax and soy here).

Global exportation profile: Barley

Canada's top destination for organic barley exports is the United States, accounting for 94% of the total export value from January to October 2023. China and Japan followed with respectively 5% and 2% (value). Examining the American market reveals that Canada was the primary exporter of barley to the United States in 2022 (99.9% of the volume imported) and 2023 (97% of the volume imported: the main competitors of Canadian export were China in 2022 (less than 0.1%) and New Zealand (3%) in 2023 (source: USDA quarterly report).

Saskatchewan and Alberta lead in this relatively small export market, both having increased the volume of their exports by 25% and 30% in 2023.There has been a decline in the volume exported in Quebec (-28%) in 2023 and to a lesser extent in BC (-2%).

Global exportation profile: Oats

The top destination for Canadian organic oats is the United States. The second most important market, South Korea, increased its overall export share from 2% to 16% in 2023 (Jan-October). 

The value of organic oat exports to Japan in the past year quadrupled compared to 2022. Japan its increased its market share considerably from 2% to 12% (total of $2.64 5M in 2023).  

The peak of organic oat exports in the last 5 years was in 2020 when exports reached $3.6M."

So far, the US has been importing fewer oats than in 2022; in the first 9 months of 2023, they imported only 50% of the volume imported in 2022. That being said the average volume of Canadian organic oats exported annually to the United State was 26,896 MT between 2018 to 2022, so at 49, 299 MT, the year 2022 was an exceptional year. In 2023, Canada still led the organic oat importation in this country. Applying the same monthly average volume of organic oats we have already exported to the remaining part of the year, we can estimate that the quantity destined for the United States in 2023 will be around 37,000 MT. Canada's imports were followed by Sweden and Italy in 2023, with 25% and less than 1% of the import values, respectively.

Global exportation profile: Corn

More than 99% of our organic corn exports go to the United States. In 2023, less than 1% was exported to the Netherlands and Hong Kong. Quebec and Ontario lead this export market. Although we can expect Quebec to export the same quantity in 2023 than they did in 2022 based on the information we have, we cannot say the same in Ontario where in the first 9 months of 2023, they exported only 40% of the volume of 2022.

In reviewing the data from Q3 of 2023 in the table above, it appears that the United States is poised to export a quantity of organic corn similar to, if not slightly more than, the previous year. However, noteworthy shifts in origin have occurred, altering the landscape. Argentina, the top importer in 2022, now holds the 3rd rank, while Turkey, absent from the corn export scene to the U.S. in 2022, has assumed a prominent position. In 2023, both Canada and Argentina experienced a decline in exportation in favor of Turkey.

Conclusion

In summary, the Canadian organic grain export market reflects a slowdown reported by buyers in late 2023 and early 2024. Analyzing data from January to October 2023 compared to the same period in 2022, the market shows a mixed trend with some declines. Despite these challenges, certain crops like Red Spring Wheat, Durum Wheat, Oat, Flax, and Barley exhibit positive growth, with flax reaching record highs. Amidst challenges, the organic grain industry in Canada showcases resilience, and this report emphasizes the need for nuanced market understanding.

For more information on crops not included in this report, you can read our Nov. 2023 analysis here.