Canada's total stock levels as of July 31 for most major crops fell substantially from previous-year levels, according to Statistics Canada’s Stocks of Principal Field Crops, released Thursday, Sept. 3.
The report was highly anticipated for two reasons, says Cliff Jamieson, Canadian grain analyst with DTN, Calgary, Alberta. First, stocks were revised lower in the March 31 report in nine out of 11 crops by an average of 28 percent year over year.
Second, the report marks the end of Canada’s 2014-15 crop year, and this year’s smaller crops in Canada mean the country will be dealing with a much reduced supply of many of its principal grain stocks. However, that’s not necessarily bullish for all crops. Jamieson was the commentator on an MGEX post-report conference call.
“Pre-report total wheat stocks projections ranged from 5.1 million to 7.1 million tons,” says Jamieson. “So this report came in at the high side of projections.”
Total wheat stocks plunged 32% from the same date in 2014 to 7.1 million metric tons. The decline was mainly the result of a 51.3-percent decline in on-farm stocks. Commercial stocks of wheat fell 6.5 percent.
Canadian wheat stocks as of July 31 are 3 percent below the five-year average. If Durham wheat stocks are excluded, however, wheat stocks are 9.6 percent above the five-year average, notes Jamieson.
Weather was favorable in late-July and throughout August, leading the trade to now expect larger wheat production than Statistics Canada’s most recent projections, notes Jamieson
Big Surprise in Canola Stocks
“The biggest surprise was in canola stocks,” says Jamieson. Statistics Canada revised 2014 canola stocks 570,000 metric tons higher, from 2.4 million tons to more than 3 million.
Canola stocks at the end of July slipped to 2.3 million metric tons, a drop of 22.8% from the previous year, but well above the range of estimates of 800,000 metric tons to 1.7 million metric tons. On-farm canola stocks fell 46.5 percent, while commercial stocks increased 17.5 percent.
“The end result is that canola supplies in the prairies should easily meet demand,” says Jamieson.
While the supply-and-demand outlook for canola was bullish only a few months ago, the scales have been weighted down. Earlier estimates from Statistics Canada put this year’s canola production at about 12.5 million metric tons. Current projections for canola production are now upwards of 14 million metric tons, he notes.
“We don’t have a supply problem going into the new crop year,” Jamieson notes. “We have a demand problem.”
Recent global financial turmoil has negatively affected demand for Canadian canola, he adds.