The 2026 FCC Food and Beverage Report states sales among food and beverage manufacturers are predicted to rise by 0.8 per cent while volumes fall by 0.7 per cent, the fourth straight year of decline. It notes sales growth will likely be driven by higher prices, not higher consumption.

WHY IT MATTERS: With trade tensions still disrupting global supply, prices could fluctuate this year, affecting consumers’ choices.

FCC chief economist Craig Johnston said this disparity speaks to the issue of consumer purchasing power.

“Higher food prices over the past several years are really weighing on households’ budgets,” he said in an interview. “They’re making more cost-conscious decisions.”

“This is actually a headwind for consumption and a headwind for volumes.”

He said any upstream changes will no doubt filter down to Canadian producers. Some challenges are shared across sectors.

“When we think about common elements, you can think about the tariffs, the elevated input costs, generally,” he said.

Margins are tight across the sector, including for farmers.

“We’re not seeing massive improvements on margins within the food and beverage manufacturing sector to pre-COVID levels, and we’re not necessarily seeing that filter through to a broad-based increase in margins for primary ag.”

“The industry in general is still going through this adjustment period” he said, “and we do expect that to continue to 2026.”

Trade tensions still a factor

Canada will continue to grapple with trade uncertainty this year, including the recent instability caused by the conflict in the Middle East.

Forecasts for costs of goods in the Food and Beverage Report were made before the crisis, “meaning that if the commodity price surge persists beyond just a few months, there would be upside risks to those estimates.”

FCC had expected pressures on some inputs, such as cattle and hogs, to ease from 2025 highs, but surging energy prices due to the conflict make that less likely.

Costs of production up

Production costs for food and beverage manufacturers increased by two per cent in 2025, driven mostly by raw material costs.

“The increase in raw material costs was driven by disruptions that constrained availability and raised prices,” the report states.

“Some examples from 2025 include avian influenza impacts on poultry … tariffs that increased the cost of imported aluminum packaging and historically low cattle herd sizes across North America.”

Costs across sectors

The report also breaks down costs associated with sub-sectors of food and beverage processing.

In grain and oilseed milling, sales were uneven in 2025 but improved by the fourth quarter. 2026 shows signs of a rebound in sales and volumes.

Large carryover of canola stocks is expected to keep prices under pressure in 2026. Canola prices are expected to fall by 3.1 per cent in 2026.

The report suggested demand for Canadian maple syrup and honey has continued to increase in the global market.

In the dairy sector, 2026 will likely see a 3.6 per cent increase of product manufacturing sales over 2025. Processors are also expected to pass along costs from the producer price increase for unprocessed milk to consumers.

In the meat manufacturing sector, FCC forecasts sales up 1.6 per cent and volumes down by 5.6 per cent.

Tight supplies of live animals, due largely to disease outbreaks, drove prices up in 2025. According to the report, “2026 will likely see another year where price, not volume, drives sales upward.”

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Jim Beusekom, president of Market Place Commodities, said feed barley was trading at C$305 to C$310 per tonne in Lethbridge, with feed wheat at a similar range. U.S. corn was trading at C$295 to C$305. He said feed barley and wheat, which were trading at C$270 per tonne at the start of the month, largely followed the upward price movement for U.S. corn futures.

For daily markets coverage, visit the Western Producer Markets Desk

Beusekom added that consistent demand and a “successful” export program for feed barley will continue to support prices over the next six weeks.

“We would expect spring and summer will be a competitive marketplace to purchase from farmers because they’ve been successful in selling their crops so far and they aren’t carrying as much as originally forecasted,” Beusekom said. “A lot of the market direction on barley is definitely still being set by corn and secondly by the exporters.”

Although the war in Iran and the halting of traffic on the Strait of Hormuz have affected energy prices nationwide, Beusekom said it hasn’t affected grain prices yet, but freight rates could change if fuel costs stay elevated. The question of who will take care of those costs is still up in the air.

“There are a lot of input costs that are creeping higher. How do you know if they are factored into those prices? It’s hard to tell,” he added. “For example, on grain that’s (shipped) for export, does the seller pay for it or does the buyer pay for it? For the grain we’re importing, it’s basically the same thing.”

More markets coverage – Klassen: Stronger barley prices weigh on feeder cattle values

As for upcoming spring conditions, Beusekom said parts of southern Alberta and southern Saskatchewan are “leaning towards drought”, but they are still subject to change.

“It does seem Western Canada is leaning on the dry side but I want to caution everyone, rain and a snowstorm will alleviate every drought concern,” he said.

Prairie Ag Hotwire reported delivered feed barley prices in Alberta at C$4.79 to C$6.68 per bushel on March 23, up 26 cents from the previous week. In Saskatchewan, the price range was C$4.90 to C$5.45/bu., unchanged from the week before. In Manitoba, prices were from C$4.60 to C$4.71/bu., down two cents.

Delivered feed wheat prices in Alberta were from C$5.97 to C$8.41/bu. for a weekly gain of 35 cents. In Saskatchewan, prices were up 30 cents at C$7 to C$7.30/bu. In Manitoba, the price increased by three cents at C$6.27/bu.

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During the latter part of the weekend of March 7 to 8, crude oil futures vaulted to nearly US$120 per barrel. Flynn said the threat of closing the Strait of Hormuz and Gulf state countries shutting down their production drove up prices.

However, by the mid-afternoon of March 9, those sharp increases moderated somewhat, with the nearby contracts for West Texas Intermediate and Brent crude oil trading at about US$90 to US$95/barrel.

Why it matters: sharply higher crude oil prices are driving up prices for fertilizer and liquid natural gas

“It shows you how the market is running on fear as well as reality,” Flynn said. “The markets are coming back down on the fact that the military (successes) the U.S. and Israel are having right now.”

Playing into the softening of crude oil’s gains was talk of releasing 300 million to 400 million barrels from the global strategic reserves.

“By talking about it, is easing concerns,” Flynn said.

Two schools of thought

He pointed to two schools of thought regarding current crude oil prices. “You got some people who believe Iran can keep the havoc for week or months. Other people think (Iran) is on its last leg.”

Flynn acknowledged that the Middle East war is not yet over, that it’s still generating good amounts of uncertainty and volatility in the markets.

“But the flip side of it, is it reasonable to believe the whole world is just going to stand by and let Iran shut down that strait for an extended period of time? I don’t think so,” he stated.

The analyst also pointed out that China is very dependent on Middle East oil coming through the Strait of Hormuz. He suggested there could be pressure on Iran to allow tankers heading to China to pass through.

With all that, Flynn expressed a note of caution. “We can’t underestimate Iran’s ability to keep up havoc for a week or two.”

And he noted there isn’t a global shortage of crude oil just yet, rather there are issues in transporting it out of the Persian Gulf.

As for United States demand for crude, Flynn said domestic producers can ramp up their production efforts.

“A lot of them have been cutting back because prices have been low. This might be a catalyst for them to bring out more oil,” he said.

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Why it matters: The escalating conflict in Iran and surrounding Mideast countries is causing large price swings in energy, currency and equity markets, with that activity spilling into the fertilizer and agricultural markets.

Crude oil futures in London and New York soared almost 30 per cent in early trading to nearly $120 a barrel, one ofthe biggest one-day jumps on record, threatening to raise costs of products from gasoline to jet fuel. The prices then pulled back, with U.S. crude up 7.72 per cent at $97.92 a barrel and Brent at $100.56 per barrel, up 8.49 per cent on the day.

Investor jitters over soaring energy prices meant a wave of global stock and bond market selling which hung over the Wall Street open. In early trading, the Dow Jones Industrial Average 1.4 per cent, the S&P 500 dropped 1.26 per cent, and the Nasdaq Composite slid 1.16 per cent.

Iran named Mojtaba Khamenei to succeed his father Ali Khamenei as Supreme Leader, signalling that hardliners remained firmly in charge a week into the war with the U.S. and Israel.

That was unlikely to be welcomed by U.S. President Donald Trump, who had declared the son “unacceptable.”

With hostilities continuing in the Middle East and tankers unable to cross the Strait of Hormuz amid the threat of Iranian drone attacks, investors were bracing for a long stretch of higher energy costs.

Investors awaited Washington’s response, said Helima Croft, head of global commodity strategy at RBC Capital Markets. “With no clear definition of what winning looks like, it is hard to forecast whether this will be a multi-week or multi-month conflict.”

GLOBAL MARKETS SINK

European shares tumbled to their lowest in more than two months on Monday, with the pan-European STOXX 600 down 1.76 per cent in a third session of losses. The benchmark index shed 5.5 per cent last week, its worst weekly performance in nearly a year.

The oil price spike was sobering for major oil importers in Asian markets, with Japan’s Nikkei .N225 closing down 5.2 per cent after a 5.5 per cent drop.

China, another big oil importer albeit with a huge stockpile of crude, saw its blue-chip index fall roughly one per cent. China on Monday said inflation had already picked up in February before the current oil surge, with consumer prices rising 1.3 per cent on the year, not necessarily a negative development, given the country has long struggled with disinflation.

Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, wrote in a note on Monday that the U.S. equity market may still seem placid but there are “extreme” rotations and stock dispersions beneath the surface.

“Over the past 80 years, war-induced oil shocks have not been kind to equities, as nearly every episode has catalyzed a recession and market sell-off,” Shalett wrote.

CENTRAL BANKS FACE INFLATION CONUNDRUM

In bond markets, the risk of rising inflation outweighed safe-haven considerations to shove yields higher globally. Yields on 10-year Treasury notes rose 2.6 basis points to 4.158 per cent, up from a trough of 3.926 per cent just a week ago.

Interest rate futures slipped as investors feared the risk of higher inflation would make it harder for the Federal Reserve to ease policy, though disappointing U.S. jobs numbers seemed to argue for stimulus.

Data on U.S. consumer prices due on Wednesday is forecast to show the annual rate holding at 2.4 per cent in February.

The Fed’s preferred measure of core inflation due on Friday is forecast to hold at 3.0 per cent, well above the central bank’s two per cent target, and analysts see a risk of an even higher number.

The danger of energy-driven inflation has led markets to wager the next move in rates from the European Central Bank could be up, possibly as early as June.

For the Bank of England, markets have shifted to pricing just a 40 per cent chance of one more easing, compared with two cuts or more before the Middle East conflict started.

Nervous investors sought the liquidity of dollars while shunning currencies from countries that are net energy importers, including Japan and much of Europe.

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Rack Petroleum Ltd.’s HedgeHog app has won the company the 2024 Ag in Motion Innovation Award for business solutions.

The digital platform allows users to confirm a guaranteed price for diesel for future delivery up to two years into the future.

Also known as “The Rack,” the agricultural services company was already hedging fuel on a “pen and paper, phone call method for a few years” before launching HedgeHog, said chief operating officer Cassandra Morari at the Ag in Motion farm show site in Langham, Sask.

The company operates 11 self-serve fuel stations across Saskatchewan and offers direct farm fuel deliveries.

“Farmers are able to manage their risk by pricing diesel ahead of time, the same way they would price their canola,” said Morari.

“Fuel tends to be something that doesn’t get a lot of time and attention,” she added.

There are no added fees for using the hedgeyourfuel.com app, and discounts are available for bulk purchases.

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The outright price of Nigerian crude Qua Iboe surpassed $100 a barrel on Monday, according to LSEG data (all figures US$). Malaysian crude Tapis reached $101.30 last week, said Bjarne Schieldrop, analyst at Swedish bank SEB, in a report.

Oil has risen to its highest level of 2023 as investors are focused on the prospect of a supply deficit in the fourth quarter after Saudi Arabia and Russia extended supply cuts. The two are the biggest producers in the OPEC+ group, most other members of which are also curbing output.

“The overall situation is that Saudi Arabia and Russia are in solid control of the oil market,” Schieldrop said.

Brent oil futures, a global benchmark, traded as high as $94.89 on Monday and the related benchmark used for trading much of the world’s physical cargoes, called dated Brent BFO-, stood just above $96 according to LSEG.

Qua Iboe, and some other crudes priced against Brent, are above $100 already because they are based on the price of dated Brent plus a cash differential or premium, currently assessed by LSEG at around $4.25 a barrel.

Schieldrop said dated Brent is highly likely to move above $100 as “only noise is needed to bring it above.” Swiss bank UBS sees Brent futures reaching triple digits.

“We expect Brent to trade in a range of $90–$100 over the coming months, with a year-end target of $95,” said UBS analyst Giovanni Staunovo.

— Alex Lawler is an oil and energy sector correspondent for Reuters from London.

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The Environmental Protection Agency (EPA), which has the authority to issue the exemptions, denied 26 petitions from 15 small refineries who applied for waivers for the 2016-2018 and 2021-2023 compliance years, the agency said on Friday. There are still two pending petitions.

The agency also disclosed which oil refiners submitted petitions in July 2022 or later, as well as which oil refiners are participating in an alternative compliance schedule that allows them flexibility in complying with biofuel blending laws.

Under the Renewable Fuel Standard (RFS), oil refiners must blend billions of gallons of biofuels into the nation’s fuel mix, or buy tradable credits from those that do. The EPA can, however, award exemptions to some small refiners if they prove that the obligations cause them undue harm.

Biden has been trying to set the United States on track to reduce carbon emissions in the fight against climate change, with a goal of net-zero emissions by 2050.

The administration has not yet extended a waiver to any refinery, reversing the policy of former President Donald Trump, whose administration granted 34 exemptions to oil refiners for the 2017 compliance year alone.

The EPA consulted with the Department of Energy on Friday’s waiver decisions and found that none of the petitioning small refineries demonstrated they face disproportionate economic hardship caused by their RFS compliance, the agency said.

New transparency

The EPA publicized on Friday the names of refiners that submitted small-refinery exemption petitions from July 2022 or later. The agency added this information to its website to reflect its commitment to transparency around RFS decisions, it said.

Refiners that submitted petitions included Calumet Montana Refining and Ergon Refining. Their petitions were denied.

The agency also publicized the names of refiners that are using an alternative schedule to prove RFS compliance. Among those listed were Sinclair Wyoming Refining Company and Kern Oil and Refining Company.

Data from the EPA showed 17 small refineries have opted into the alternative compliance schedule for the 2020 compliance year, the only compliance year shown in the data. The group had retired 360 million credits to show compliance, and had 510 million credits outstanding, EPA’s website showed.

— Stephanie Kelly is a Reuters correspondent covering the U.S. oil industry from New York City.

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The agricultural commodities trader has not altered its own capacity plans due to a U.S. government proposal on biofuels announced last week, Heckman said on a webcast. “Demand is up,” he said.

Under the plan, announced by the U.S Environmental Protection Agency, oil refiners will be required to add 20.82 billion gallons of biofuels to their fuel in 2023, 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025.

Some analysts said the proposal’s increase in the amount of biofuels that refiners must use was not as great as they expected — a view that has pressured shares of Bunge and rival ADM.

The proposal “calls for a surprisingly low amount of growth” in the requirement for biofuels use, JP Morgan analysts said in a note on Tuesday. The sector could have an oversupply of renewable diesel and delays or cancellations by companies of capacity expansion without large enough mandates, the firm said.

“It’s sure not affecting us,” Heckman said of the EPA proposal. “We’ve been making our analysis for the long term.”

Bunge and Chevron formed a joint venture last year and announced plans to expand capacity by 2024 at Bunge facilities in Illinois and Louisiana that crush soybeans, which can be used to produce soy-based diesel.

Separately, Heckman said it makes “complete sense” for China to add Brazil as a supplier of corn, a move that threatens U.S. grain exports to China. Chinese customs updated its list of approved Brazilian corn exporters last month, including facilities owned by Bunge, ADM and others.

In Ukraine, the war has likely been a “net positive” for Bunge because the company has needed to manage more risk for customers, Heckman said. An agreement to maintain an export corridor for Ukrainian grain has helped bring down food-price inflation, though capacity has not returned to pre-war levels, he said.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.

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Suncor replaced its CEO in July and agreed to review its retail fuel unit by the end of this year after Elliott Investment, which owns three per cent of the company, pushed for changes, flagging a poor safety record and lacklustre stock performance.

But Canada’s second-largest oil producer decided against selling its fuel stations business after a review that included gauging interest from third parties.

Earlier this year analysts estimated the unit could be worth $5 billion to $11 billion. Suncor owns 1,600 Petro-Canada stations accounting for 18 per cent of Canada’s retail fuel sales, making the business one of the biggest in the country.

Petro-Canada’s operations also include bulk fuel delivery for farm and industrial customers across the country, as well as lubricant supply for farm, construction and transport equipment.

“The board unanimously decided it’s in shareholders’ best long-term interests to retain retail and continue to optimize the network to enhance cash flow and value generation,” interim CEO Kris Smith said during an investor day presentation.

Calgary-based Suncor also released its 2023 capital budget on Tuesday, forecasting higher capital spending while production remains nearly flat.

The company said it would focus on improving the retail fuel business through expanding partnerships with non-fuel businesses such as quick service restaurants and convenience stores.

“We do not see the retail segment as being an issue operationally and believe the asset provides outsized strategic value within the existing organizational structure,” National Bank analyst Travis Wood said in a note to clients.

Elliott did not immediately respond to a request for comment.

Suncor has made a number of other major changes since the activist firm took aim at the company, including replacing its CEO and some board members, selling renewable energy assets and taking steps to improve safety and operations at oil sands sites.

Smith told investors the new CEO search was expected to conclude in the first quarter of 2023.

Industry analysts were broadly positive about Suncor’s decision to hold on to its retail fuel business, but warned higher operating costs in 2023 could weigh on shares.

Suncor said oil sands costs would rise as it starts a three-year plan to improve performance at the troubled Fort Hills oil sands mine in northern Alberta, while inflation was also impacting the ability to reduce costs.

— Reporting for Reuters by Nia Williams; additional reporting by Ankit Kumar and Mrinalika Roy.

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A coalition of gangs has prevented the distribution of diesel and gasoline for over a month to protest a plan to cut fuel subsidies. Most transport is halted, with looting and gang shootouts becoming increasingly common.

“We have for the first time a famine present in Haiti,” Ulrika Richardson, resident and humanitarian co-ordinator for the U.N. system in Haiti, said in a telephone interview.

“The gang violence has cut off the capital from the food-producing south, and that means that we have now an increase in food insecurity.”

A U.N. spokesperson later clarified that Richardson should have described the situation as catastrophic hunger rather than famine.

Richardson said other countries need to do more to support Haiti, as the Caribbean country’s humanitarian response plan for this year has received less than 30 per cent of the required funding.

“While we address the current symptoms of the multiple crises that Haitians are facing… the security and the fuel crisis — we also have to make sure that we invest in the longer-term root causes, such as impunity, such as corruption,” said Richardson, the U.N.’s most senior humanitarian official in Haiti.

Some 19,200 people in Haiti’s Cite Soleil are suffering famine conditions, according to an analysis by U.N. agencies and aid groups on Friday. A famine is declared when at least 20 per cent of the households in a region are suffering famine conditions.

The analysis said that in total 4.7 million people — nearly half of Haiti’s population — are experiencing high levels of acute food insecurity.

The situation was “close to breaking point,” Jean-Martin Bauer, World Food Program country director in Haiti, told reporters earlier.

A U.N. report released on Friday said children as young as 10 and elderly women have been subjected to sexual violence, including collective rapes for hours in front of their parents or children.

“Gangs use sexual violence to instil fear, and alarmingly the number of cases increases by the day as the humanitarian and human rights crisis in Haiti deepens,” said Nada Al-Nashif, the acting human rights chief.

Prime Minister Ariel Henry last week asked for military assistance from abroad to confront the gangs, and U.N. Secretary-General Antonio Guterres has proposed “a rapid action force” to help Haiti’s police.

It is not immediately evident which countries would participate in such a force.

U.S. development agency USAID on Friday sent a disaster assistance response team to Haiti, the agency’s chief, Samantha Power, wrote on Twitter.

Such teams are dispatched in response to natural disasters and complex emergencies, and typically include infectious disease specialists, nutritionists, and logistics experts, according to USAID’s website.

The U.S. State Department has offered support for Haiti’s police and has sent a Coast Guard vessel to patrol the area.

The U.S. and Canada in the coming days will deliver armoured vehicles to the Haitian police that have been purchased by Haiti, U.S. assistant secretary of state Brian Nichols said in an interview with Haitian TV on Thursday.

— Reporting for Reuters by Brian Ellsworth in Miami and Paul Carrel; additional reporting by Michelle Nichols at the United Nations.

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