The Canadian Western Red Spring %Wheat market is experiencing slumping prices and a slowdown in contract orders due to uncertainty caused by potential U.S. trade tariffs.
Since President Donlad Trump’s last-minute announcement of a pause on tariffs of up to 25% on Canadian imports, potential buyers of Canada’s wheat have turned cautious, say analysts.
As such, prices for Canadian wheat have fallen from $275.21 U.S. per metric ton at the end of January to $267.68 U.S. by the start of February.
Since June of last year, prices for Canadian Western Red Spring Wheat have fallen 14%, at one point hitting an all time low of $253.17 U.S. a metric ton before rebounding.
Commodities analysts say that, in addition to the threat of U.S. tariffs, Canadian wheat also faces intense competition from wheat supplies from countries such as Australia and Brazil.
While much of Australia’s wheat exports have in the past gone to China, recent trade tensions have slowed Chinese purchases, resulting in an increased supply of Australian wheat available at a discount to competing Canadian wheat.
The U.S. Department of Agriculture (USDA) forecasts a weak market for wheat globally, estimating that wheat exports will decline by three million tons to 208.99 million in February.
Another head wind for Canada’s wheat is the Canadian dollar, which has recently rebounded after the pause in tariffs was announced, making the country’s exports less attractive.
It is not known if President Trump will eventually follow through with his threat to impose tariffs on Canadian imports, including agriculture products.
