Canada Markets

Agriculture and Agri-Food Canada (AAFC) released their latest Outlook for Principal Field Crops on Monday with the most glaring message being sent to the canola market. Even a 1.611 million metric ton (mmt) revision higher to past production by Statistics Canada on June 27 was not enough to offset strong demand. Ending stocks tightened further for 2024-25 with 2025-26 clearly in a supply-rationing situation. The question now is whether the market will do its job of discouraging exports as AAFC is predicting.

Given cumulative canola exports as of week 49 stood at 9.235 mmt with three weeks to go in the marketing year, it should have been a surprise to no one that the 2024-25 export estimate would have to be increased. AAFC did just that, bumping it up again from 9 mmt to 9.5 mmt.

With the 1.611 mmt added to past production, thereby increasing beginning stocks, the very unusual June estimate of negative 959,000 metric ton (mt) feed, waste & dockage (FWD) use was corrected (as AAFC had expected) with a positive 204,000 mt FWD estimate now being used for 2024-25. It is worth noting that it is still much lower than the 801,000 mt FWD used in 2023-24.

Even with the upward revisions to past production, 2024-25 canola ending stocks were cut by 50,000 mt from the June update with only 1.1 mmt expected to remain. That tightens the beginning stocks for 2025-26 with rationing of supplies needed for the coming year.

Based on increasing crush capacity, AAFC increased food & industrial use by 500,000 mt to 11.5 mmt for new crop, matching 2024-25 levels. In an attempt to maintain minimum pipeline ending stocks of 1.1 mmt for 2025-26, exports will have to be cut from 9.5 mmt to 6 mmt, or 37% in the coming year, according to AAFC estimates. In other words, it will be up to the market to ensure the domestic crush is maintained while exports fall.

Sticking with the oilseeds, AAFC cut 2025-26 soybean ending stocks by 25,000 mt compared to last month's estimates by increasing production by 175,000 mt (thanks to increased seeded area), which allowed exports to increase by 200,000 mt. A smaller U.S. soybean crop resulting in reduced exports allows for the estimate changes here.

Turning to the grains, 2024-25 ending stocks of wheat except durum were left unchanged at an already tight 3.7 mmt, but exports were increased by another 200,000 mt, supplied by a matching reduction in FWD use. 2025-26 ending stocks were left unchanged at 3.8 mmt with a 400,000 mt cut in exports required due to a similar reduction in production thanks to lower seeded area.

Durum ending stocks were pared back another 100,000 mt from last month's estimate thanks to a 300,000-mt increase in exports partially offset by a 200,000-mt reduction in FWD. That takes the export estimate to 5.4 mmt for the 2024-25 crop year (from 3.549 mmt in 2023-24). It's worth noting that the estimate looks like it is already outdated given 5.498 mmt has been shipped by week 49 with three weeks remaining in the marketing year. Exports for 2025-26 are currently expected to fall back to 4.6 mmt, helping to allow for an increase in ending stocks to 500,000 mt (from 300,000 mt in 2024-25).

Barley figures were juggled quite a bit with 2024-25 exports cut by 150,000 mt from last month, allowing for a 55,000-mt increase in FWD and a 100,000-mt bump in ending stocks (to 900,000 mt). For 2025-26, carryover was left unchanged for the month but still down 300,000 mt from old crop to 600,000 mt. A 180,000-mt cut in production thanks to reduced seeded area was partially offset by a 100,000-mt reduction in exports while FWD use increased 25,000 mt from last month.

Corn changes were relatively minor with 2024-25 estimates seeing a 200,000-mt increase in exports offset by a similar cut to FWD use. 2025-26 production is expected to increase 343,000 mt from last month due to increased yield assumptions with that being partially offset by a 143,000-mt increase in FWD use. Ending stocks are expected to recover to 1.9 mmt from the tight 1.6-mmt level estimated for 2024-25.

And last, but not least, oats had ending stocks for both 2024-25 and 2025-26 left unchanged at a minimum pipeline level of 350,000 mt. That came despite a 50,000-mt increase in the old-crop export estimate, which was offset by a similar cut to FWD use. A similar story was seen for new crop with a 100,000-mt increase in exports being partially offset by an 86,000-mt cut to FWD use and a 15,000-mt increase in production due to slightly higher seeded area. The most important takeaway should be that the juggling of use still leaves ending stocks uncomfortably close to the 2021-22 level of 332,600 mt when prices in Southern Manitoba topped out over $11/bushel on short contract buybacks. As such, watch for cash premiums as much as futures market action for marketing opportunities.

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