StatsCan crop stock report released

Statistics Canada recently released its estimates of total Canadian crop stocks as of July 31 (old crop marketing carry-out).

Canada's total stocks of wheat and barley were reported down from the same date last year, while stocks of canola, oats, dry peas and lentils increased.

Market reaction to the numbers was limited.

While old crop carry-out helps establish the foundation of the new crop marketing year beginning supply (added to 2018 production), Canada is not in need of rationing supply at this time, nor expected to be in such a position this year. When that’s the case, a five per cent variance in carryout matters little at a time when the harvest season is rolling.

The following table is a recap of Statistics Canada's stocks report for the period ended July 31, 2018. Figures are in million metric tons.

Wheat

Total stocks of Canadian wheat at July 31 were down 9.9 per cent to 6.2 million tonnes compared with July 31, 2017. The decline was due to a 22.5 per cent decrease in commercial stocks to 3.5 million tonnes. This was offset by a 15 per cent increase in on-farm stocks (+347,000 tonnes).

Despite lower production, higher wheat quality in 2017-2018 compared to last year contributed to increased exports, which could have lowered commercial stocks.

Despite the prospect of declining world wheat inventory in the coming year, rally potential in the offshore cash market remains limited for at least as long Russia remains an aggressive seller. However, later in the marketing year, North America should start picking up more business as cheap Russian supplies start to diminish.

North America should start picking up more wheat export business as cheap Russian supplies start to diminish.

Canola

Canadian canola stocks are seen at 2.4 million tonnes as of July 31. That's comparable to the year before and within the range of trade expectations.

Canola production in 2017 reached a record high 21.3 million tonnes, while deliveries were down compared with the previous crop year, pushing up year-end stocks.

The canola export pace during the 2017-2018 marketing season slowed up after a strong start last fall. Exports did pick up briefly in late June and early July, but eased again, and the season total came in below the previous year. The domestic canola crush was strong, coming in just slightly above the previous year.

The canola market for now remains locked in a narrow consolidation pattern on the price charts. Upside price potential for the canola market seems limited for now as the harvest season rolls along and an initial flush of new crop supply enters the commercial pipeline.

Dry peas and lentils

Overall stocks of lentils totalled 876,000 tonnes as of July 31, up 178.1 per cent from the same date in 2017 and above many trade expectations.

The increase was due to higher farm stocks (+223.7 per cent). That’s going to put a further drag on the lentil market. The result may not depress prices further, but will probably hold the market down at current low price levels for longer.

Meanwhile, total stocks of dry peas rose 116.7 per cent to 650,000 tonnes, about spot-on with PFCanada expectations. Import tariffs and trade restrictions introduced by India led to the back-up build in Canadian supplies.

Barley

Total barley stocks were down 40.8 per cent to 1.3 million tonnes as of July 31, suggestive of tightening feed grain supply across Western Canada for the marketing year ahead.

Southern Alberta feed barley cash bids remain firm at $246 to $248 a tonne. October to December delivered bids are $255 to $260 a tonne. Prices have risen enough to attract U.S. corn imports into southern Alberta feedlots, but the overall price trend for feed grains remains well supported.

Bottom line

Canada's total stocks of wheat and barley were reported down from the same date a year earlier, while stocks of canola, oats, dry peas and lentils increased.


Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call 204-654-4290 or visit www.pfcanada.com to find out more about his services.