Year-ending stocks of wheat in Canada plunged nearly 20% below 2014 levels, according to Statistics Canada’s Stocks of Principal Field Grains report, released Thursday. However, that’s unlikely to help U.S. wheat producers—at least not yet—because the global wheat market remains oversupplied.
Come spring, Canadian producers will be looking at alternative crops to wheat, including lentils and other pulse crops, said Cliff Jamieson, Canadian grain analyst for DTN, in Calgary. Jamieson was the commentator on an MGEX post-report press conference.
“Wheat stocks are historically tight,” Jamieson said. “I don’t believe this report will have any impact on North American wheat prices,” he added. “The market as a whole is still facing a very well-supplied global wheat market. In Canada, the basis could tighten, but global fundamentals are weak.”
Wheat Stocks Above 5-Year Averages
Canadian wheat stocks are significantly lower than a year ago, down 19.3% to 20.7 million metric tons as of December 31, 2015. Canadian farmers held 16.8 million metric tons of wheat on-farm, or 20.8% more than they did at the end of 2014. Commercial wheat stocks of 3.9 million metric tons fell 11.6% below year-earlier levels.
Excluding durum wheat, stocks of all other wheat at 16.5 million metric tons are 23.5% lower than a year ago and 14.5% lower than the five-year average, Jamieson noted.
Canola Stocks Slip
Canadian canola stocks as of December 31 were 3.9% lower than a year-earlier at 12.1 million metric tons due to increased crush and exports. On-farm canola stocks fell 7.6% to 10.4 million metric tons, but commercial stocks climbed 28% to a record high of 1.7 million metric tons.
“Canola stocks are 13.8% above the five-year average,” Jamieson said. “Today’s number supports Stats Canada’s higher December production number.”
Canola futures prices in Canada fell $3 per metric ton across all contracts following the report.
Stocks of Corn, Soybeans Rising
Year-over-year corn stocks climbed 17% to 11.4 million metric tons as December 31, 2015. The gain was a direct reflection of an 18% increase in corn production in 2015. On-farm stocks of corn were 12.4% larger than a year-earlier, while commercial stocks soared 34.1% to a record-high of 2.7 million metric tons.
Year-end soybean stocks rose 1% to a record high of 3.4 million metric tons. On-farm stocks declined from 2014’s record 2 million metric tons, while commercial stocks rose 8.3% to 1.4 million metric tons.
Barley Get Support
Barley stocks of 5.7 million metric tons rose 4.1% from year-earlier levels due a 6.5% gain in on-farm stocks, which total 5.4 million metric tons. Commercial stocks of barley accounted for less than 5% of total barley stocks after falling 32% below year-earlier levels to 231,500 metric tons.
“This report will help support barley markets,” noted Jamieson. “But supply will be a little bit better than last year.”
Year-end stocks of oats were virtually unchanged at 2.6 million metric tons. However, on-farm stocks fell 1.5% to 2.3 million metric tons, while commercial stocks rose 17% to 220,100.
Pulse Crops Will Pay
Lentil stocks at 1.97 million metric tons plunged 47% below 2014 levels.
“We’ll see record prices for lentils. Lentils provide the best potential return for all crops,” he added. “We will see pulse crops steal acres from other crops this spring, including wheat.”