Large carryover supplies following a banner year for Canadian yields could lead to a complacent mindset and market complications.
Chuck Penner, founder of LeftField Commodity Research, spoke at the 2026 Canadian Crops Convention about supply and demand in the Canadian grains sector and how a strong 2025 could lead to a complex 2026.
WHY IT MATTERS: Canadian farmers will soon be planting the 2026 crops, with large old crop supplies complicating the market outlook.
“We talk in ag markets always about cycles,” said Penner. “The market is cycling. And so right now, we’re in a supply-heavy situation. But is that going to continue? I would argue ‘no.’”
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“What we have is this comfortable carryover,” he continued noting that can lead to a complacent mindset in grain markets.
Canada produced an aggregated 106 million tonnes of grains, oilseeds, pulses and other crops in 2025, 10 million more than the previous year.
“So, what are we doing with that grain?” Penner asked.
Farmer deliveries are already up three million tonnes over last year. Exports are at 25 million tonnes, up from the five-year average by around 2.5 million.
“That’s good, but it still doesn’t dispose of 10 million tonnes more production,” Penner said. “If we keep this pace up, and there are some really good signs that we will keep this pace up, then we will work that down to some degree.”
Despite what Penner referred to as a “heavy-supply mindset” hanging over the sector, prices are still moving, and he expects them to continue firming up.
Many crops see seasonal price peaks in the spring, but Penner cautioned that those commodities will start to tip over in early summer “and everybody’s going to freak out and talk about the heavy supplies again.”
One problem now is there is not much urgency in attracting acreage.
In tighter supply years, such as after the 2021 drought, buyers were desperate and some started contracting for 2022 new crop in October and November already. However, this year, the sentiment is “we’ll buy it when we need it,” said Penner.
Resolving heavy supply
For some major crops like barley, canola and soybeans, stocks-to-use ratios are wide, but Penner said those ratios will likely be a bit lower at the end of 2026-27.
“There’s a key reason for that,” he said. “What happens when we drop back to either average or to trend yields? It basically wipes out. It’s a far bigger influence on the supply situation for next year than acreage shifts.”
While acreage shifts are interesting, a return to average yields in Western Canada after the bumper crops of 2025-26 would “do a whole lot in terms of resolving the heavy supply situation that we have,” said Penner.
“If we move to an average yield or even a trend yield in those major crops, the supply numbers get close to the five-year average,” he said adding that supplies of oats, corn and soybeans may even become tight.
What to plant this year?
Penner said his recommendation for 2026 was to plant oats.
“If you all rush out and plant oats now, of course that effect is gone. But barley and durum supplies should remain comfortable. It’s the pulses and special crops that are going to take a couple of years to really resolve the heavy supply situation.”
Currently, he said global supplies will favour the buyer.
“2025-26 was a good year globally. No question,” he said. “The question is, can it repeat?”
Penner offered general market thoughts on crops for 2026.
Wheat
Wheat saw record global and Canadian production with prices remaining relatively flat. Penner pointed out wheat is almost never touched by trade disruptions or tariffs. Canada is also exporting durum almost at last year’s record pace, even with strong European and North African crops.
Barley
Barley had a record yield last year with the largest Canadian crop since 2020-21, and prices are rising. Penner said Canada has strong barley exports to countries like China, Japan and Saudi Arabia.
Oats
Penner said the main concern with oats is a weaker export pace. Other export markets like Australia and the U.S., which saw its biggest oat crop in over 10 years, could challenge Canada. He said he thought soft prices could discourage acreage in 2026 and leave Canada with “some really tight supplies of oats.”
Canola
Canola production and yields were strong globally, leading to increased supplies, but according to Penner, “the demand side is the bigger picture.” With the market more certain following U.S. biofuels and potential tariffs, prices have continued to rise. He added if canola drops back to average levels, supplies will tighten and demand will strengthen.
Peas
Peas also had near-record yields in Canada which, combined with a strong Russian crop, have led to a global glut. Though imports from India are not what they have been, Penner said other buyers like China have also stepped in. He said there is a sizable carryover into 2026, especially for green peas.
Lentils
Penner said demand is fairly static for green lentils but could be stronger for red lentils. On both fronts, he said it must get stronger to deal with supply, but it is “hard to see that happening.” He added there is a huge supply of green lentils now hanging over the market, but “the red picture will be more balanced.”
