US tariff uncertainty casts shadow over Canadian wheat market

US President Donald Trump’s last-minute decision on Feb. 3 to pause the implementation of tariffs on Canadian goods by one month resulted in uncertainty in the Canadian wheat market.

Trump decided to delay imposing new duties on the US’s biggest trading partners, Canada and Mexico, after striking deals with Mexico’s President Claudia Sheinbaum and Canada’s Prime Minister Justin Trudeau on Feb. 3.

“Regarding tariffs, I believe this monthly pause will create more uncertainty,” a Canadian wheat source said.

The average price assessed by S&P Global Commodity Insights for 13.5% CWRS wheat FOB Vancouver (30-45 days forward) for January 2025 was $269.36/mt, down $38.96/mt from the average price assessed for January 2024 at $308.32/mt.

The volume of non-durum wheat exported to the United States from Canada for marketing year 2024-25 (August-July) through December 2024 totaled 466,300 mt, according to the most recent Exports of Canadian grain and wheat flour report from the Canadian Grain Commission.

Canada’s total non-durum wheat exports for MY24-25 through Dec. 29 amounted to 8.44 million mt, which puts the US share of wheat exports at just around 5% of Canada’s total exportable volume through that period, CGC data showed.

According to one Canadian wheat trader, the US still needs high protein wheat for the current marketing year and any disruptions to the flow of wheat south from Canada could make it challenging and more expensive for US buyers to source their high protein needs.

Despite holding a smaller market share of CWRS wheat compared to other global importers, any volume of CWRS wheat that doesn’t move into the US will have to be reallocated elsewhere. Sources anticipate that once tariffs are imposed, the flow of Canadian spring and durum wheat to the US could stop completely.

Other sources have noted that a building supply of Canadian wheat in current market conditions could drive down CWRS wheat export prices and limit profit margins for growers and sellers.

Canadian wheat export prices have held near multi-year lows for much of MY24-25. Strong selling after harvest provided Canadian wheat farmers with enough cash flow to hold their supplies for much of the winter and await more profitable price opportunities.

Canadian wheat farmers would soon be shifting their focus to the next planting season and were heard likely beginning to offload some of their grain in the near-term, considering the potential for prices to decline further.

Following Australia’s recent harvest, an abundance of high protein wheat on the market has put downward pressure on Canadian wheat prices as overseas prices remain competitive.

Australia is one of Canada’s primary competitors for shares of high-protein wheat exports globally.

While Black Sea supply concerns and a recent cold snap in the US plains provided some bullish support for global wheat prices, strength in the US dollar and hand-to-mouth demand have limited the upside for Canadian wheat prices.

“Extremely uncertain times,” the first source said.

Tags: Canada, wheat, USA