Canada Markets

To no one's surprise, stocks of almost all principal field crops in Canada were reported to have fallen as of July 31, the last day of the Canadian 2012/13 crop year. The reported carryout for the major grains was either within the range of pre-report trade estimates as reported by Commodity News Service, or very close to it. Last year's United States Midwest drought combined with production issues elsewhere in the world was a boon for Canadian producers, as Canadian production was met with solid global demand.

While these numbers provide a starting point for the 2013/14 growing season in the form of opening stocks, today's markets were not affected due to the release of this bullish report, as the spotlight is centered on the current harvest.

Wheat excluding durum saw stocks fall to 3.906 mmt, down 12.1% from 2012, which follows a 23.3% decline from 2011 to 2012. This is the lowest wheat carryout since 2008, when the carryout was 3.557 mmt, and is only the second time that the wheat excluding durum ending stocks have slipped below 4 mmt in data going back to 1980. The 10-year average is 4.9273 mmt.

While this is encouraging data, there is perhaps more focus on the fact that Stats Canada pegged the all-wheat production in Canada at 30.6 mmt, which is up 12.9% from last year which will significantly add to 2013/14 supplies.

July 31 durum stocks were reported at 1.151 mmt, down 22.5% from 2012, which follows a decline of 5.1% from 2011 to 2012. This compares to pre-report estimates reported by Commodity News Service which ranged from 900,000 mt to 1.3 mmt. This is the lowest stocks level since July 2008 when stocks dipped to 809,000. The 10-year average is 1.896 mmt.

Canola stocks as of July 31 were reported at 608,000 mt, which is 14% below 2012, which follows a 67.7% drop from 2011 to 2012. Stocks remain critically tight, although not as tight as some would like to believe. Evidence of this comes from the pre-report trade estimates, which ranged from 250,000 mt to 900,000 mt. Of interest here is the Canadian Grain Commission reported visible stocks in commercial facilities as of July 31 at 397,200 mt, which makes a total stock estimate of 250,000 mt impossible.

Eyebrows continue to be raised over the on-farm estimate of 200,000 mt of canola as of July 31. This would reflect little more than bin bottoms across the prairies, yet the Canadian Grain Commission Grain Statistics Weekly indicates producers shipping an additional 146,800 mt to process and primary elevators in the first two weeks of August to August 18, suggesting that on-farm stocks could be much higher than reported.

Barley stocks as of July 31 fell by 17.7% to 983,000 mt. This is the lowest ending stocks in data going back to 1980, with the 10-year average at 2.1523 mmt. July 31 oat stocks as of July 31 were reduced by 36.9% to 511,000 mt, which was slightly above the range of trade estimates of 200,000 to 500,000 mt. The 10-year average is at 889,600 mt, while current stocks are the lowest seen since 2002 when ending stocks were reported at 363,000 mt.

Stocks of lentils and peas were reduced sharply. Pea stocks fell 41% to 174,000 mt, the tightest level seen since July 2007 when stocks were reported at 167,000 mt. Farm stocks of dry peas were reported at an extremely tight 60,000 mt in light of strong export opportunities combined with attractive pricing opportunities. July 31 stocks of lentils were reported at 300,000 mt, which reflects a 65.1% reduction from the 860,000 mt inventory seen at July 31 2012. This number is above the 10-year average at 281,200 mt. The carryout in five of the past 10 years was below 50,000 mt, which indicates the potential wild swings in stocks that take place from year to year.

Two of the largest swings in stocks were reported in the small crops of sunflower seed and chick peas. Sunflower seed inventories increased by 228.6% to 23,000 mt, which is equal to the 10-year average at 23,300 mt. Chick pea stock increased 390.9% to 54,000 mt on poor export prospects, which is above the 10-year average of 45,100 mt.

Cliff Jamieson can be reached at cliff.jameison@telventdtn.com

(ES)

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