Statistics Canada released their March 31 stocks estimates on Friday, showing stocks of all major grains up 1.268 million metric tons (mmt) as of March 31 from the same date last year, with the largest year over year gains seen in stocks of canola, soybeans, peas, lentils and oats. Inventories of durum, barley and flax declined over the year.
The canola estimate was highly anticipated number in this report. While there were no formal pre-report surveys conducted, some media reports suggested that stocks could rise as much as 1.5 mmt above last year's levels. While they did rise from March 2017, stocks were 1.143 mmt higher than reported for the previous year at 9.077 mmt, below the record set in March 2014 of 9.247 mmt.
This number should be viewed as bearish. Total December through March disappearance is estimated at 5.1 mmt based on Statistics Canada numbers, down 7% from the same period last crop year. A continuation of this pace would lead to ending stocks approaching 3 mmt, well above the current 2 mmt estimate released by AAFC. The market is slow to signal concern, with the July/Nov and Nov/Jan futures spreads showing strength over the week. Old-crop canola is trading modestly higher at the time of writing with support from a lower Canadian dollar trade, despite a double-digit move lower seen in soybeans as of mid-morning trade, as well as the turn lower in soybean oil futures. Old-crop is poised to close higher over the week while holding near contract highs.
Soybean stocks were announced at a record 2.628 mmt as of March 31, up 38.7% from the previous year and the first year over year increase in stocks seen in three years. It is encouraging to see a year over year increase in both farm and commercial stocks, although farm stocks grew at a much faster pace of 58% as compared to the 18% increase in commercial stocks. December through March disappearance is calculated at a higher rate than seen in 2016/17, although a similar pace would still lead to ending stocks that are well-above the current AAFC estimate of 375,000 mt, bearish for soybeans overall.
At 16.392 mmt, Canada's all-wheat stocks are 3.9% below year-ago levels. It is important to note that this is entirely tied to a 16.2% reduction in durum stocks while wheat stocks (excluding durum) remain unchanged year over year.
Canada's wheat stocks (excluding durum) were estimated at 12.973 mmt, unchanged from a year ago and roughly one million tons below the five-year average. A higher level of production in 2017 is being nicely offset by higher exports, with Dec-March disappearance 15.7% higher than year-ago levels. The five-year average April through July disappearance is calculated at 8.5 mmt, a pace that would project to a 4.5 mmt carryout at the end of July, slightly lower than the current 5 mmt AAFC estimate.
A combination of a lower seeded acreage combined with lower yields in 2017 have led to Statistics Canada's March 31 estimate of 3.4 mmt of durum, down 16.2% from last year and just slightly higher than the five year average of 3.3 mmt. December through March disappearance was well-below last year's pace, but almost equal to the five-year average. A continuation of this average pace of disappearance would lead to July 31 ending stocks of roughly 1.5 mmt, 200,000 mt higher than the current AAFC estimate.
Corn stocks in Canada were estimated to increase by 4.3% or 389,000 mt from March 2017 to 8.749 mmt, increasing for the third straight year and to a record level. Friday's statistics point to a significant 25.5% drop in commercial stocks to 2.1 mmt while farm stocks grew 19% to 6.7 mmt. Small increases were seen in farm stocks in both Quebec and Manitoba, while Ontario farm stocks are estimated to grow by 940,000 mt over the past year. December through March disappearance is calculated to almost equal the five-year average, while a continuation of this average pace of demand would result in ending stocks of 3.1 mmt, well-above the current 2.3 mmt estimate released by AAFC. This report should be viewed as bearish for Canadian corn.
Canada's barley stocks were estimated at 3.4 mmt as of March 31, the lowest in five years and close to all-time record lows. Canada's record low seeded acres in 2017 are partially behind this estimate, along with solid export demand. December through March disappearance is 32% higher than the five-year average, while a continuation of this pace relative to average would point to ending stocks falling to 670,000 mt, well-below the current 1.450 mmt AAFC estimate and should be viewed as bullish for barley prices. Even an average pace of demand would result in a one-million ton carryout, still well-below current government estimates.
Oat stocks were estimated at 2.097 mmt, up 19.8% from 2017 given the larger crop size in 2017, while December through March disappearance is only slightly larger than the five-year average. An average pace of disappearance over the balance of the year would lead to a carryout of 1.1 mmt, equal to current government estimates.
Lentil stocks were increased by 34.8% from March 2017 to 1.5 mmt as product backs up on farm given a lack of favorable export opportunities. This is the highest level seen in four years and above the five-year average of 1.1 mmt. The December through March disappearance came in just 6.2% below the five-year average. A continuation of this pace, if achievable, would point to ending stocks of 840,000 mt, which could dip below the current 1.1 mmt estimate released by AAFC.
Dry pea stocks were estimated 12.7% higher at 1.9 mmt, the highest level in eight years and above the five-year average of 1.520 mmt. December through March disappearance was slightly below that realized in 2016-17 but higher than the five-year average. Even an average pace of disappearance over the balance of the crop year could lead to ending stocks dipping to 724,000 mt, also below the current 1.1 mmt estimate released by AAFC.
Cliff Jamieson can be reached at firstname.lastname@example.org
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