Producers should prepare for possible crop price drops later this year. Ottawa-Most crop prices have eased off 2022 levels but should stay above their five-year highs through the rest of the 2022-23 marketing year (MY), says a sector outlook from Farm Credit Canada. Corn and soybean prices should continue rising from 2021/22 levels in the 2022/23 MY. Prices will decline for most crops with the 2023 harvest but again remain above the five-year average. “The good news about crop prices is tempered again by the forecast for high input costs, particularly those for fertilizer and energy,” FCC said. “Despite the pressure, margins are expected to remain well above break-even in 2023. Across Eastern and Western Canada, profitability will fall year over year but will also easily exceed their respective five-year averages.” Fertilizer markets remain destabilized after three years of severe supply shocks and dramatically rising prices, FCC said. “EU natural gas prices will set the floor price for global ammonia and other fertilizer products in 2023.” That means average Canadian fertilizer prices should break last year's record-setting increases tied to low distillate stocks hampering fertilizer production. U.S. distillate stocks for products like diesel and heating oil are at levels not seen since the 1950s and global supplies of them will likely tighten further with the EU embargoes on Russian diesel imports. FCC said Eastern producers of soybeans and corn can expect positive margins as high as $100 an acre in 2023, with 2022 margins expected at $255 an acre. Global wheat stocks are down while Canadian wheat production rose 47 per cent and durum by 79 per cent to make the 2022/23 crop the third largest on record, with the average quality for CWRS wheat rated higher than the past five-year average. Canadian wheat may find many buyers this year due to smaller crops in Argentina and the U.S. and the lower value of the loonie. Total global corn production overall is projected to be 4.9 per cent lower while Canada's 2022-23 corn production is estimated to be at a new record level and 4 per cent higher than last year and 5 per cent higher than the previous five-year average. Canadian corn imports should drop sharply leaving domestic stocks down 13 per cent last year's record high although still slightly higher than the previous five-year average. Global soybeans stocks are up 5.4 per cent even with drought in Argentina and lower production in the U.S. Canadian soybean production was up slightly YoY for the 2022/23 MY but 22.2 per cent lower than the five-year average. Canola production in Canada was 32.1 per cent higher than in 2021, which means a larger supply to export. The crushing industry is expected to function at capacity, given the robust demand for canola oil. Under this scenario, carry-out stocks are slated to fall 8.6 per cent YoY.