StatsCan releases its grain stock report

Market Focus

Highlights

  • Canada is chewing through off-grade wheat faster. Could a turn to a firmer domestic feed grain price trend be close?
  • Canadian canola stocks were down 23.3 per cent from the same time in 2016 to 6.6 million tonnes - a four-year low.
  • Implied feed barley consumption stays high

Statistics Canada recently released its Canadian grain stocks as of March 31 report, pulling from a March survey of 11,600 Canadian farms. Farmers were asked to report the amounts of grain, oilseeds and special crops in on-farm storage. Data on commercial stocks of western major crops originate from the Canadian Grain Commission.

As expected, total stocks of canola, soybeans and oats were lower compared with the same date in 2016. Meanwhile, total stocks of wheat, corn and barley were up.

Wheat

Total wheat stocks at 16.6 million tonnes are up 15.5 per cent from 2016, and came in well below the average of trade expectations of 18.3 million tonnes. In fact, the 2017 figures is below the lowest of pre-report trade estimates.

Canada remains well-supplied on pulses, but I don't think the numbers quoted by StatsCan will put any new pressure on the market that wasn't already there.

What can be inferred by this is that domestic feed use for wheat has moved along at a rapid pace. Last year, wetness resulted in a large amount of lower quality grain.

This report does not change the milling wheat situation, but means Canada is chewing through off-grade wheat faster. That suggests a turning point to a firmer domestic feed grain price trend may be closer at hand.

On durum, while supplies were well-above last year, market watchers expected "monster" durum stocks much higher than StatsCan’s 4.1-million-tonnes estimate. Here too, perhaps we are using up this durum faster than we thought, as lower prices drive up domestic feed usage.

Canola

As of March 31, total canola stocks were down 23.3 per cent from 2016 to 6.6 million tonnes - a four-year low.

The number seems to confirm market speculation that old-crop canola supplies will continue grinding down towards a fairly tight level by marketing year-end on July 31 before the new crop harvest.

However, the trade is still of the opinion that StatsCan’s current estimate of 2016 canola production at 18.4 million tonnes is too low.

Nonetheless, this report indicates there is potentially a tight stocks scenario going into the end of the marketing year.

Soybeans

Soybean stocks decreased 4.2 per cent to 1.9 million tonnes as of March 31, despite a 1.4 per cent increase in production in 2016. On-farm stocks were down 19.6 per cent to 930,000 tonnes, mainly driven by Ontario, where they fell 33.8 per cent to 460,000 tonnes. Commercial stocks increased 18.6 per cent to 925,000 tonnes.

Barley and oats

Total barley stocks increased 22.6 per cent to 4.6 million tonnes as of March 31, following a 6.8 per cent gain in production in 2016. That's slightly above trade expectations, though not enough to have a market impact.

Implied feed barley consumption stays high, and it remains tough to dispel a 2016-2017 carryout that hovers around two million tonnes. That’s a large number, but smaller than many industry expectations.

Pulses

StatsCan pegged lentil stocks as of March 31 at 1.1 million tonnes, and dry peas at 1.7 million. I don't think there is anything here that really changes the story on lentils or peas enough to affect price.

In fact, demand issues outside of Canada matter more to pulse price trends matter more than Canadian supply. While pulses are not in a bull market at this time, prices have improved with an extension of a fumigation policy from India.

Canada remains well-supplied on pulses, but I don't think the numbers quoted by StatsCan will put any new pressure on the market that wasn't already there.

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.

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