Canada Markets

The most recent estimates released by Agriculture and Agri-Food Canada points to the potential for ending stocks to reach their tightest levels in four years in 2016/17, with demand curtailed given tighter carry-in stocks. Current estimates show ending stocks for 2016/17 falling by 48%, to 700,000 metric tons, the lowest since an estimated 588,000 mt were carried out of the 2012/13 crop year. This would reflect a 4.2% stocks/use ratio given current estimates, down from the current estimate of 7.4% estimate for the current crop year.

The attached chart shows scenarios of 2016/17 ending stocks given varying acreage and yield estimates, with a set of assumptions utilized by AAFC. The range of yields on the vertical axis was chosen as they represent the highest and lowest average Canadian yield seen in the past 10 years. The range of acres across the top represent the range of trade acreage estimates released by Commodity News Service prior to the most recent Statistics Canada report.

Negative numbers on the chart represent combinations of acreage and yield which would lead to negative stocks, given current demand estimates of 16.650 mmt, which involves a modest 100,000 mt year-over-year decline in domestic crush to 8 mmt along with a 1.5 mmt or 15% decline in exports to 8.5 mmt.

Numbers highlighted in yellow represent yield and acreage combinations which would lead to deterioration in the stocks/use ratio from the 2015/16 estimate of 7.4% given current demand assumptions. While not shown, acres would have to rise by roughly 700,000 acres from the current Statistics Canada acreage estimate of 20.02 million acres or yield will have to rise by roughly 1.2 bushels per acre, leaving the acres constant in order for ending stocks to fall in the yellow zone, given current demand estimates.

It appears that the Prairies are headed to an above-average crop, while the media has used the word "bumper" to describe the potential on the Prairies. The Western Grain Elevator Association has estimated the Prairies crop (all grains) to range from 63 mmt to 74 mmt, up from the five-year average of 61 mmt while below the 2013 record of 76.8 mmt.

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