Multiple market forces to consider when planning for 2025

By Clare Stanfield

The 2024 crop year wasn’t great, but it wasn’t awful, either. “It depends on where you were but, generally speaking, things have been okay,” says Bruce Burnett, director of markets and weather information with Glacier FarmMedia. “From an overall production perspective, the crop was better than the previous year. Durum and pulse yields recovered back to more normal.”

Indeed, a Statistics Canada report from December last year shows the 2024 durum production is expected to be up from 2023 by more than 1.7 million tonnes, lentil production up by almost 630,000 tonnes, and chickpeas are expected to reach 287,000 tonnes, which is nearly double 2023 production. And, despite the late season heat, Burnett says crop quality across the board didn’t look too bad.

But what about canola, which is still the biggest earner for most farmers. “Canola is the most intriguing,” says Burnett. “Statistics Canada’s latest 2024 production estimate was reduced to 17.8 million tonnes, which is down by 1.35 million tonnes from last year. This reduction makes sense when you think that canola was nicely blooming and podding when that late summer heat came.”

And yet, canola prices remain stubbornly low. At the same time, Canadian exports are on record pace; South American crops look like they’re going to be huge; the war in Ukraine still wages on; and a change of administration in the U.S. suggests trade volatility ahead. It’s a potent mix for farmers to contemplate as they plan their 2025 season, both in terms of crop plans and marketing strategy. Burnett offers some thoughts.

Global forces, local realities

Grain markets are responding (sometimes in odd ways) to global events. Take the war in Ukraine, for example.

“There was a pop up in grain prices when Russia invaded Ukraine, and the market has been taking that premium out ever since,” says Burnett, explaining that the initial fear of grain shortages that drove prices up has mostly petered out with the realization there is enough grain available for global buyers, despite the war lingering on. “The market likes to revert to the mean,” he says, adding that buyers are indicating they want prices to go back to pre-war levels, and they are.

Still, Burnett thinks the markets aren’t concerned enough about the situation. Even if the war was over tomorrow, he says, huge areas of the country will need to be cleared of mines and war detritus. Also, the land will need to be made functional again for people to work. “The market has a zero-risk premium already built in for that,” he says. It’s as if everything will go back to pre-war conditions immediately. “But there’s still a huge amount of risk there, especially from the buyer’s side, and no one seems to be concerned about it. I think the market is mis-pricing that risk.”

On the home front, Canadian grain exports have been on fire. “We’re close to record pace for exports,” says Burnett. “Wheat is only 20,000 tonnes behind where we were last year. And with canola, we’re 1.77 million tonnes ahead of last year at the same time. And we are on pace to export more than 10 million tonnes of canola, which is unsustainable given the latest production forecast.”

Why is this happening? Sadly, it’s low prices. “Last year, canola was priced at a significant premium to other oils,” he says. “But this year canola is priced as if it is on sale.

Indeed, as of late November, Burnett says that March 2025 canola futures are $150 per tonne lower for Canadian canola than for European rapeseed, which is making Canadian canola ultra competitive in the global market.

“We were trading canola at $700 per tonne six months ago, today it’s $590 per tonne,” he says. “As soon as we had the prospects of a new crop in 2024, prices started to drop.” This is both good and bad. “Last year, Australia stole a lot of our major markets, but we’re more price competitive this year. Last year, we were fighting to retain markets and this year we’re selling to everyone,” says Burnett. “There’s such strong export demand for canola, there’s a risk we’ll run out.”

Adding to that price pressure is the South American soybean crop, which (in late November) was being harvested and looking very good. Burnett says that, barring a disaster, this will keep prices steady going into 2025.

Profitability and planning

Looking ahead to the 2025 growing season, Burnett pulls all these strands together and knows farmers may have some difficult decisions to make as they pencil out their year.

“There is huge concern about cash flow and input costs,” he says. “The overall 2024 crop is similar to the previous year, but the prices are off 15 to 20 per cent. At the same time, a lot of input costs have not dropped, so we are seeing declining profitability.

“Will that change planting intentions next year? Maybe not. But with wheat and canola prices down, and pulse crop prices holding steady, maybe farmers will be looking at those crops for some support. We could see an increase in specialty crops, but farmers need to assess the risks and rewards of getting into crops like pulses.”

Going into 2025, Burnett suggests keeping an eye on a couple of things and being prepared to act.

“Crops in South America are going to be huge,” he says. “It’s something to monitor over the next three months, especially with oilseeds. If they get a good crop, that will stop prices from going higher.” Conversely, if they produce a smaller than expected crop, prices could rise a bit.

“Also keep an eye on how the Canadian exports continue over the winter,” says Burnett. “If we get winter shipping delays, that could push prices down.”

And when it comes to U.S. trade? “Be prepared for volatility,” he says. Like everyone, he wonders if threatened tariffs are simply a negotiation tactic, or a genuine attempt to boost U.S. revenue. “For the most part, the U.S. is a good customer to us, but they’re not our primary customer. Tariffs will have an impact, but all they’ll do is drive our products offshore. Keep an eye on it because there’s general risk with that,” he says.

“In terms of marketing, you need to keep your eye on the fundamentals and be fairly aggressive when you see prices that are going to help you out,” says Burnett. “There’ll be wide swings. Be cautious and keep on rolling.”