Canada Markets

Today's Dec. 31 Canadian grain stocks report as released by Statistics Canada confirmed wheat everyone knew: huge 2013 crops combined with disappointing logistical issues has lead to ballooning stocks at the end of the calendar year. Total stocks of the principal grains reported total 97.145 million metric tonnes, up 31.5% from year-ago levels.

The largest tonnage increase over 2012 December stocks was seen in wheat (excluding durum) with stocks at 23.038 mmt, up 38.1% from year-ago levels. This is a record for wheat stocks at this time, with nearly 88% of this inventory still on-farm. The five-year average for Dec. 31 stocks is 17.025 mmt.

The attached chart indicates the Dec. 31 stocks (blue bars) along with the five-year average January through July disappearance (red bars). The difference between these represents a hypothetical look at where stocks could be at the end of July, which is shown by the green bars. The purple bars represent the 2012/13 July 31 ending stocks. In the case of wheat, this analysis would suggest a 10.781 mmt carryout at the end of 2013/14, up from 3.906 mmt in 2012/13. The current Agriculture and Agri Food Canada (AAFC) forecast suggests a wheat carryout of 9.3 mmt.

Durum stocks were reported at 5.342 mmt, up 35.9% from December 2012 and above the five-year average of 4.442 mmt. This is the largest Dec. 31 stocks seen since December 2009. Eighty-nine percent of this inventory is on-farm, the highest level of on-farm stocks seen since December 2005. With an average January-through-July disappearance of 2.662 mmt over the past five years, this would imply a potential carryout of 2.680 mmt for 2013/14, up from 1.151 mmt in 2012/13. This is slightly higher than Agriculture and Agri Food Canada's (AAFC) current carryout of 2.2 mmt.

On a percentage basis, canola stocks proved to be the bleakest data in today's report, with Dec. 31 stocks reported at 12.597 mmt, up 55.3% from last year's 8.1 mmt; 92.9% of this inventory was on farm as of Dec. 31, with commercial stocks being the lowest seen since 2008. The five-year average for Dec. 31 stocks is 9.406 mmt. Given the five-year average disappearance of 7.767 mmt in the January-through-July period, this would suggest that ending stocks could reach as high as 4.8 mmt. Should disappearance from January-through-July reach the record disappearance reached in 2011/12 of 8.940 mmt, which is totally impossible given current circumstances, ending stocks would still be as high as 3.657 mmt, which compares to the current estimated carryout as indicated by AAFC of 3 mmt.

Barley stocks as of Dec. 31 were 27.2% higher than the year prior at 6.695 mmt. This is the highest level of stocks seen since December 2009. This level is only slightly higher than the five-year average Dec. 31 stocks of 6.570 mmt.

Dry pea stocks as of Dec. 31 are 7.2% higher than in 2012/13 at 2.198 mmt. This is below the five-year average stocks for Dec. 31 of 2.303 mmt. The five-year average January through July disappearance is 1.831 mmt, which would suggest ending stocks of 367,000 mt for 2013/14, up 111% from the 174,000 mt ending stocks reached in 2012/13.

Oat stocks as of Dec. 31 are 39.7% above last year at 2.871 mmt. This compares to the five-year average stocks at Dec. 31 at 2.647 mmt. Given the five-year average for January-through-July disappearance of 1.699 mmt, ending stocks could be in the range of 1.172 mmt, up 129% from the 511,000 mt carryout last year. AAFC has estimated 2013/14 ending stocks for oats to reach 1.4 mmt.

Flaxseed stocks as of Dec. 31 were reported at 505,000 mt, up 22.6% from year-ago levels. This is below the five-year average inventory level at 554,000 mt. Average January-through-July disappearance for the past five years is 370,000 mt, which would lead to a July 31 carryout of 134,600 mt, which compares to the 2012/13 carryout of 71,000 mt. The current AAFC forecast suggests a 150,000 mt carryout.

December stocks reported for lentils, rye and canary seed were lower than last year. Lentils were reported at 1.138 mmt, down 23.2% from year-ago levels. This is the lowest level of stocks for December seen since December 2009. Rye stocks were reported at 122,000 mt, down 37.8% from last year and the tightest levels reported since December 2002. Canary seed stocks were reported at 81,000 mt, down 28.3% from year-ago levels and the lowest level of December stocks seen in Statistics Canada's historic canary seed data. Some trade estimates for 2013/14 canary seed suggest a higher level of 2013 production than estimated by Statistics Canada, so it will be interesting to see if today's data impacts prices.

Dec. 31 stocks of corn were reported at 11.527 mmt, up 10.8% from last year and a record level of corn stocks for December. Soybean stocks are little changed with Dec. 31 supplies up only 2.4%, at 2.650 mmt.

Markets showed little interest in today's data, with both wheat and canola trading higher in mid-morning trade. Some circles are suggesting that today's data release was not as bad as some pre-report estimates which were received favorable by the market.

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

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