Canada Markets

In the most recent Grain Statistics Weekly for week 49, or the week-ending July 12, the Canadian Grain Commission reported Canada's cumulative wheat exports through licensed terminals at 16.7396 million metric tons, down 430,800 metric tons or 2.5% from the same period last crop year. Cumulative durum exports are shown at 4.8521 mmt, up 551,200 mt or 12.8% from the same period in 2018-19.

As seen on the attached chart, cumulative week 49 all-wheat exports are 120,400 mt or 0.6% higher than the year-ago volume, the first time in 29 weeks where 2019-20 volume has moved ahead of the year-ago pace.

As seen on the chart, this can be attributed to a late crop year spike in demand, which is not typical in the midst of the Northern Hemisphere winter wheat harvest.

As of week 39, or the week-ending May 3, Canada's all-wheat exports were 982,800 mt behind the year-ago pace. As of this week, durum exports were up 639,300 mt year-over-year, while wheat exports lagged by 1.6 mmt.

Over the next 10 weeks, exports have recovered from this lag. Over this period, wheat exports increased by 4.6 mmt and durum exports increased by 1 mmt, or a total of 5.657 mmt. The wheat exports for this 10-week period is 30.3% higher than the three-year average, while 35.9% higher than the five-year average. Durum exports are 21.7% higher than the three-year average and 40.6% higher than the five-year average.

Some of this surge may be the continued process of catching up from the rail strike in late 2019 and the rail blockades early in 2020. The 10-week period saw the largest weekly volume of durum shipped with 204,900 mt shipped in week 40, while the three largest weekly volumes of wheat were shipped, including 559,500 mt in week 48, 549,800 mt in week 42 and a whopping 755,000 mt in week 40.

At the same time, there are clear indications of strengthening demand. While no information is available on destinations grain has been shipped to beyond May, the CGC reports wheat shipments to Indonesia at 369,600 mt in May -- which is the largest monthly volume shipped to this destination in the past decade perhaps close to the largest ever. The volume shipped to China was reported at 345,600 mt in May, which is the largest monthly volume shipped since May 2019. Nothing else jumps out in the way of wheat shipments, although another vessel of 61,000 mt was shipped to Australia for the month, a competitor in global trade.

May's export data shows two-thirds of the May volume was shipped to three destinations: Italy (149,400 mt), Morocco (174,682 mt) and Algeria (108,190 mt), with Statistics Canada volumes in brackets. These are exceptionally large monthly shipments to these countries.

In the case of durum, it would appear that this interest continues. Saskatchewan Agriculture rated the crop at 78% Good/Excellent as of July 13 and Alberta Agriculture rated the province's crop at 89.1% G/E as of July 14, with Statistics Canada estimating the acres planted primarily across the two provinces up 16.2% from 2019 to 5.689 million acres. The crop condition across both provinces is above average.

At the same pdqinfo.ca shows prices in southern Alberta and southwestern Saskatchewan reaching crop-year highs this week, with the southern Alberta bid jumping $4.03/mt to $305.48 on July 17, while the southwest Saskatchewan bid increased $10.25/mt to $290.09/mt on July 16. The southeast Saskatchewan bid rose $8.71/mt on July 16 to $297.88/mt but remains below the $302.62/mt high reached in mid-May.

This bears watching. Current AAFC estimates indicate that 2019-20 ending stocks are expected to fall from 1.792 mmt to 900,000 mt, or roughly 50%. At the same time, it appears that exports will exceed the government's 5 mmt forecast. Either grain is in tight hands, or stocks are much tighter than forecast.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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