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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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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Serge Buy told the standing committee on agriculture recently that examples of farmers using biomass to dry grain are just that, and only larger farms with bigger, healthier budgets are likely to be able to afford new technology in the short term.

Why it matters: Drying grain can represent a significant cost to farmers and it relies heavily on fossil fuels.

The committee is studying Bill C-234, amendments to federal legislation that would exempt natural gas and propane used to dry grain and heat barns from the price on carbon in the four backstop provinces of Alberta, Saskatchewan, Manitoba and Ontario.

[RELATED] Carbon price exemptions preferred over rebates, committee hears

Buy’s comments didn’t seem to sit well with at least one Liberal committee member, Ryan Turnbull, who represents Whitby, Ont.

He said his research discovered that 12 years ago there were 16 examples of grain-drying technology that were all scalable.

Turnbull said these are commercially viable solutions.

“So, is it not true that there’s actually grain-drying technology and it’s been around for at least 12 years and yet it hasn’t been adopted by the industry?” he asked.

Buy disagreed.

Turnbull then said there are in his riding “greenhouses and barns that are being heated and cooled with solar, geothermal and air-source heat pumps, which is the same as I can do in my home.”

He said many homes in his riding are powered the same way.

“How can you actually sit there and tell us that there is no viable technology when I have examples in my riding?” he said to Buy.

Buy repeated that the technologies are not scalable. Their cost, whether they are manufactured at a scale that allows all producers to use them and whether they are viable in all parts of the country are all issues, he said.

Turnbull agreed with Tom Green, senior climate policy adviser at the David Suzuki Foundation, who said the carbon price signal must be kept to encourage adoption of new technology.

He said it “seems really rational” to have the price signal and incentives because industries haven’t adopted new technologies on their own.

[RELATED] New technology uses radio waves to dry grain

Buy agreed that the government should support farmers to invest in technology.

“Absolutely, hallelujah, this is great, but should they tax them to do so? That’s a different philosophical way of seeing things. If you penalize people long enough and hard enough, will they make changes?”

Earlier in the meeting, witnesses said the rebate offered through C-8, a government bill, doesn’t work.

Branden Leslie, manager of policy and government relations for Grain Growers of Canada, said the rebate is applied inconsistently and an exemption is preferable.

“If you bring off all of your cereals dry and you really don’t need to use your dryer that year at all, then you could still be eligible for a rebate under C-8 based on your overall expenses, despite you not using any of the fuels that we’re trying to solve this year,” he said.

He and others said the government’s incentive program to purchase more efficient grain dryers is laudable, but $20 million doesn’t go very far when applied across the country.

Brendan Byrne, president of Grain Farmers of Ontario, said the rebates under C-8 are less than 15 per cent of what producers are paying in carbon tax.

Ray Orb, president of the Saskatchewan Association of Rural Municipalities, told the meeting that farmers have reported the rebate would be about three per cent of their costs.

Discussion of a sunset clause on C-234, in which the exemption would end after a period of time, indicated that 10 years might not be long enough for widespread change.

Liberal MP Rechie Valdez, Mississauga-Streetsville, suggested biomass is a way forward and specifically referenced BioDryAir in Manitoba.

She cited a farmer who spent about $150,000 in grain drying in 2019 but spent only $3,200 the next year after switching to biomass.

“Would you agree that this system would be something that’s more cost-effective without putting a price on pollution?” she asked.

Leslie said he would like to know the cost of conversion.

There is also the question of how much drying the farmer did from one year to the next.

Buy told the committee there are two ways to deal with fossil fuel use and pollution.

“We penalize the farming communities and hope that by hitting (them over the) head repeatedly, they magically abandon fossil fuels or polluting sources of energy. Or we take measures to support the farming community as it transitions to alternative fuels and less polluting sources of energy. Imposing a carbon tax on the farmers that don’t have alternatives feels like we’re hitting them over the head.”

He repeatedly said scalability is a problem and he warned the committee that carbon pricing is increasing the urban-rural divide.

“If you want to tax the polluting Hummer-driving urban warriors until they are forced to ride a bicycle please fill your boots, but do recognize that farmers drive trucks because they have to,” he said.

Green said politicians are spreading misinformation about pollution pricing and misrepresenting its impacts. He said most households receive more back than they pay and implementing the exemptions in C-234 “would set Canada on a slippery slope of sector-by-sector and interest-by-interest exemptions that risk fundamentally undermining the (Greenhouse Gas Pollution Pricing Act) as an economy-wide measure.”

– This article was originally published at The Western Producer.

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The president vowed last month to stay on until his five-year term ended in 2024, despite the anger his tenure prompted among the people. Thousands of Sri Lankans stormed his official residence on Saturday, forcing him to go into hiding and agree to step down. He was to have done so on Wednesday.

“One day this had to happen,” said Mallawaara Arachchi, a 73-year-old retired engineer, as he wandered around the official residence of the prime minister last occupied by Rajapaksa’s elder brother, Mahinda, and now also by protesters.

“They have robbed everything from the people,” he said. But with the family gone “we will be the best country in the world in the near future.”

Mahinda resigned in May, thus ending his son Yoshith’s stint as chief of staff. His other son, Namal, elder brother Chamal and younger brothers Basil and Shasheendra quit as ministers in April.

Former finance minister Basil, who also holds U.S. citizenship, was stopped at the airport from fleeing the country on Tuesday by immigration officials wary of the public response if he had been allowed to leave.

The country of 22 million has barely any dollars left to import fuel, it has defaulted on billions of dollars of foreign loans, headline inflation hit 54.6 per cent last month with more dire predictions, while schools and offices stay shut to conserve petrol and diesel.

It is the most debilitating political and economic crisis to hit the country since independence in 1948, including during a brutal civil war in which Gotabaya Rajapaksa, as defence secretary, oversaw the crushing of Tamil Tiger insurgents in 2009.

Much of the blame for the crisis has been placed on the COVID-19 pandemic that squeezed out the island’s tourism industry and dried up remittances from Sri Lankans overseas. The Rajapaksas’ tax cuts left a hole in state revenues and a ban on chemical fertilizer damaged crops before it was lifted.

Talks with the International Monetary Fund for a rescue package could yield results later this year or next at the earliest, prompting Sri Lanka to seek even more aid from neighbours India and China.

Sri Lanka’s parliament will elect a new president on July 20.

Prime Minister Ranil Wickremesinghe has also offered to resign, and if that happens, the parliamentary speaker will be the acting president for a few days as per the constitution before the election is concluded.

“Sri Lanka is in uncharted territory, we have never seen this level of volatility,” said Bhavani Fonseka, senior researcher at Colombo-based think tank Centre for Policy Alternatives.

“Unless both the president and the prime minister resign we are looking at prolonged instability. What we have seen so far will be nothing compared to what could happen.”

— Reporting for Reuters by Uditha Jayasinghe and Devjyot Ghoshal; writing by Krishna N. Das.

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“I wish I could say there’s a light at the end of the tunnel, but I would say right now, it’s just a flicker,” he said, referring to consumers who are apoplectic about prices as being ‘petro-plectic.’

Kloza pointed a good chunk of the blame for the record-high prices on the exploration companies, the production companies and especially the refiners. He said refiners most often make $5 to $25 per barrel, but are now raking in $50 to $60/barrel (all figures US$).

“If they are running Canadian crude through the Great Lakes…it’s probably closer to $75 to $80/barrel. Those [prices] are not typical, those are epic,” he said.

While crude oil prices are certain to push higher, he doubted if they will top the $150/barrel as some analysts have suggested. Rather he expects them to be in the $120s per barrel, perhaps pushing above the March high of $130.50, but not much more.

Kloza explained there are three key reasons for the price hikes, with one being demand.

“It’s the perceived spike in gasoline demand and the overall increase in diesel demand that’s tied to China coming out of its lockdowns,” he said.

The second reason is the tight supply of diesel, especially in the U.S., and the third being the speculative flaws in the market.

“You’ll find that among the different classes of speculators, a small speculator does not have to report to the Commodities Futures Trading Commission. They can control $30 million worth of fuel. That’s badly in need of an update,” Kloza stressed.

Added to that is the large amount of managed and fund money that’s “very skewed to the long side.”

As for Canadian crude prices, Kloza said the price differential is unusually high at this time.

As of Friday, the difference between the market prices for West Texas Intermediate crude oil was $20.77/barrel higher than Western Canadian Select. Most often the differential is around $13/barrel.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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