Canadian farmers say they are likely to produce average-sized wheat and canola crops as a lack of rain impacts this year’s harvest.
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Canada’s western prairie region has grappled for years with drought conditions, and there was hope that this spring and summer would be different. However, while some areas are reporting dense crops of spring wheat and canola due to good growing conditions, other areas report dying crops due to a lack of rain again this season.
The implications of this year’s crop are significant, as Canada is the world’s largest exporter of canola, durum wheat, and other crops such as lentils. Countries such as China, the U.S., and Japan are among the largest buyers of Canadian canola and wheat, and they rely on shipments from the northern country.
Canadian Oats
Leading U.S. food companies such as General Mills (GIS) make their Cheerios cereal and Quaker oatmeal using Canadian oats. Other companies that could be impacted by the situation in Canada include Kraft Heinz (KHC), Kellanova (K), and Archer-Daniels-Midland (ADM). Statistics Canada reports that Canada’s total crop output this year is likely to be about the same as in 2024.
That said, the outlook is worse for durum wheat and lentils, which farmers grow in some of the areas hit hardest by extreme dryness on Canada’s prairies. Farmers report that cereal grains such as wheat and durum are developing far fewer kernels per plant this year because of drought, resulting in lower yields.
As a result, Canada’s durum wheat yield is expected to be less than last year’s 34 bushels per acre, which was an average yield. Smoky skies from burning wildfires across the country are also hurting the growth of some crops, as the fires impact sunlight and temperatures.
Is GIS Stock a Buy?
The stock of General Mills has a consensus Hold rating among 17 Wall Street analysts. That rating is based on three Buy, 12 Hold, and two Sell recommendations issued in the last three months. The average GIS price target of $54.13 implies 8.04% upside from current levels.
