Crop Prices change in Western Canada from 2015 to 2017
Canada is one of the biggest crop producing and exporting country. Since China is the biggest importing country on canola and wheat, the trade relationship between Canada and China is important. The current project will be divided into four sectors :1) The three Prairie provinces Alberta, Manitoba and Saskatchewan are the major crop growing area, the international prices of canola and wheat are different in different zones, so in this sector I will try to find the factors which can affect the prices of canola and wheat on quality and yield; 2) I will try to find the factors which affect the market analysis on business side, 3) narrow the relationship between Canada and China, explore the things to affect the crop trade; 4) try to predict to crop international market price based all the things I learned previously and predict the trade volume between Canada and China.
Canola and spring wheat are the major crops in Canada. Canada is the third largest canola and the seventh largest wheat production country in the world (FAO, 2017). It is also one of the world’s leading exporters on wheat and canola. In 2015 (OEC, 2017), Canada shipped 16% of the world’s export wheat, equal to $6.65 billion dollars. Canada also occupied 42% of the world canola market and produced $3.92 billion dollars.
Three Prairie Provinces of Manitoba, Saskatchewan and Alberta produced more than 90% and 99% of the whole wheat and canola in Canada, respectively from 2013 to 2017 (Statistics Canada, 2017). Spring wheat and canola were the top two field crops in these three provinces. From 2011 to 2016, the plant area of canola increased from 19.1million acres to 20.4 million acres, while the plant area of spring wheat decreased from 16.5 million acres to 15.2 million acres (Statistics Canada, 2017). More than 99% of wheat decreased grown acres were replace by canola.
According to the PDQ database (www.pdqinfo.ca) (Figure 1), the three provinces were divided into nine zones by the locations and the soil type. In this website, we more focused on the prices change of Canadian western red spring wheat (CWRS), Canadian western Amber Durum wheat (CWAD) and canola. Durum wheat was only planted in southern Alberta (zone 3), Saskatchewan (zone 4, 5, 6, 7) and western Manitoba (zone 8). According to the international market prices from Sept 2015 to Sept 2017, the average price of canola was highest among the three crops with CAD$466.43, followed by durum wheat, the average price of Canadian western red spring wheat was about twice lower than canola per ton over the nine zones.
For Canadian western red spring wheat, southeast Saskatchewan had the lowest average price with CAD$228.94 per ton, and north Alberta occupied the highest price with CAD$242.92 per ton over the two years. West Manitoba got the highest price on durum wheat with CAD$293.2 per ton and Northwest Saskatchewan had the lowest price with CAD$283.9. As for canola, southern Alberta had the highest price over the nine zones and northwest Saskatchewan. The price changes of each zone followed by the same trend during the two years (Figure 2). The lowest prices of Canadian western red spring wheat, durum wheat and canola were found in the third quarter in 2016 with CAD$ 207.7, CAD$ 256.2, CAD$ 426.1 per ton on average, respectively. Both spring wheat and canola had higher price in 2017 than 2015 and 2016. For durum wheat, the price was higher in the last two quarters in 2015 than other times.
For spring wheat and durum wheat, the price differences positively correlated with protein content which associated soil type and climate. I randomly picked one location in each zone to compare the daily temperature differences between the maximum temperature and the lowest temperature from May to August in 2015-2017. The differences ranged from 10.6-16oC (data not shown). The high temperature differences could help wheat increase the net photosynthesis rate and increase the protein accumulation.
North Alberta (Zone 2) belongs to the black soil zone having higher level of organic matter at the surface than other soil zones. While the major soil types of southeast Saskatchewan is brown soil zone which has a thin surface layer low in organic matter. Except the Peace area (Zone 1), northern Alberta has the longer daytime than other zones during the wheat reproductive stage. In general, wheat yield and quality are negatively correlated with each other, since I did not collect all the yield data from the farmers in each zone, so no detail can be discussed further. The precipitation and diseases in each zone are also the factors to affect the wheat quality.
All the three crops showed lowest price in the third quarter in 2016. The possible reason is that they are harvested in September annually, the farmers might not have enough space for the huge amount of grain. The price decreased due to the over-supply. The reason why I cannot find the low point in 2015 and 2017 might because I cannot find the entire prices for the three crops in 2015 from the database, and the third quarter of 2017 did not finished.
Based on the data I have right now, I analyzed only one entire year (2016), it is hard to find the regularity.
For the factors affected canola price changes, I will discuss in my next report.
Figure 1. The price changes of Canadian western hard spring wheat (CWRS), Canadian western amber durum (CWAD) and Canola in each zone among Alberta, Saskatchewan and Manitoba from 2015 to 2017.
Figure 2. The price changes of Canadian western hard spring wheat (A), Canadian western amber durum (B) and Canola (C) over nine zone in each quarter among Alberta, Saskatchewan and Manitoba from 2015 to 2017