CANADA – Farm Credit Canada held a webinar to review their economic outlook for 2025 on Jan. 23.
“We really want to dive into some of the most relevant trends expected for 2025,” said J.P Gervais, Vice-President and Chief Economist for Farm Credit Canada (FCC).
“We believe that with more information you can make better informed decisions within your business and highlight some of the most important trends to be thinking about now.”
There is an uncertain environment with the threats of tariffs on Canadian exports and that adds complexity for 2025.
Desmond Sobool, Economics Director and Deputy Chief Economist felt the most important thing to monitor for the 2025 was prices for the agriculture industry.
“There's a lot of factors that go into determining what's happening with the current price but also what's going to happen with price over the rest of the year,” said Sobool.
There are key points within each sector of the industry that stood out in the agriculture sectors.
Canola production was lower in 2024 due to a challenging growing season.
China is stockpiling canola in preparation for future happenings and over 75% of exports right now are going to China.
Sobool stated that Canada will see a record canola crush demand with only another two to three million tons to meet the export target for the year.
China has launched an anti-dumping probe against Canadian canola, but it has not been implemented yet and the impacts are undetermined.
China has started to reduce imports of soybeans from Brazil and FCC is watching the impacts of those actions.
Globally there is a surplus in supply of soybeans and corn.
Lower yields for 2024 are supporting corn and soy prices right now.
Wheat has high supplies in both the U.S. and Canada and global demand is exceeding supply which will support prices through-out 2025 according to Sobool.
Fertilizer prices are generally trending lower except for phosphates.
There's a global phosphate shortage with nitrogen and potash fertilizer prices easing.
In the cattle sector record high cattle prices will continue through 2025 and 2026 although inventory levels are at a 30-year low.
Sobool stated that heifers are not being retained to rebuild the herds and data shows that the number of farms is also decreasing.
The magic number according to Sobool is 47 percent going to slaughter to start re-building the herds but it will take years.
In the West after a couple of years of weaker pasture production has led to importing feed which only adds to costs.
Strong pasture production and feed availability can improve herd rebuilding.
The hog sector expects overall high export levels for hogs and pork.
Sobool reported that there has been a 2% loss of hog processing capacity in Canada year over year.
Ten percent more hogs were shipped to the U.S. than in the previous year.
Canadian hog prices are at the highest level of the last five years with the summer months expected to be higher with forecasts coming in March on the FCC website.
For the dairy sector 2024 saw a much-improved production year after four challenging years.
FCC sees a slightly more optimistic pricing situation.
There has been population growth in 2024, and dairy product sales increased by seven percent.
In the Broiler sector demand for chicken is strong.
The price advantage does not appear to be increasing as much, although population growth and demand plays a part in 2025.
In 2024 there were record high poultry stocks.
Avian flu cases rose in late 2024 with the most cases in BC.
There are concerns that if Avian Flu spreads this will impact the broiler sector profitability.
FCC commented that the agrifood industry is fortunate with economic conditions immunity to a point.
Consumer stresses in their budgets, uncooperative weather conditions, and tariffs could have an impact on producers to food processors to retailers in 2025.
Kristen Rangasamy, Economics Manager and Principal Economist felt the most important thing to monitor for the 2025 Canadian economy is trade with the United States.
Tariffs will hurt exports and as a result the Canadian Gross Domestic product (GDP) growth.
Canada's economy is already vulnerable being severely restrained by the significant drop in the population growth in Canada because of restrictions to immigration according to Rangasamy.
He explained that the Bank of Canada confirms this in the GDP growth estimate of 1.7 percent in 2025, a drop from the 2024 rate of 2.6 percent.
The Bank of Canada GDP rate is calculated by taking the working population growth and add the productivity growth estimates.
Canada has experienced productivity challenges for the last few years according to Rangasamy.
With tariffs added, U.S. buyers will see higher priced Canadian products.
“We think it (GDP growth) is going to be below potential this year like it was below potential the last couple of years,” said Rangasamy.
Interest rates and the value of the Canadian dollar are also key indicators to monitor.
“We are expecting the Bank of Canada to lower interest rates from 3.25 basis points to 2.5 percent by the end of the year,” said Rangasamy.
He commented that Canada needs a weakening dollar right now to be competitive because of this loss of productivity.
