Canada Markets

It was no secret that last year's record production combined with shipping delays faced over the winter would lead to significant stocks as of March 31, the date that ends the first eight months of the Canadian crop year.

Canada's all-wheat stocks were reported at 21.251 million metric tonnes, up 46.9% from year-ago levels. The last time Canada's all-wheat stocks were as large was in 1994 when March 31 stocks were reported at 22.357 mmt. Perhaps of interest is where these stocks are located: 3.921 mmt of this total was found in commercial positions, which is down 11% from year-ago levels, while farm inventories are reported at 17.330 mmt, up 72.5% from year-ago levels. With disappointing movement over the winter months, the trade has been reluctant to fill space with wheat, which will result in a longer-lasting impact on cash basis levels in the country, given the sheer volumes which are yet to move.

Also of interest is the build-up of stocks in Saskatchewan as compared to the other provinces. Farm stocks of wheat in Manitoba grew 55.8% from year-ago levels to 2.025 mmt, farm stocks in Alberta grew 56.5% to 5.225 mmt, while Saskatchewan stocks grew 89.8% to 9.725 mmt. The slowdown in rail movement has affected Saskatchewan the most, given railway efforts to move the most easily accessible stocks.

Canada's wheat supplies (excluding durum) were reported at 17.348 mmt, up 50.7% from year-ago levels and the largest since 1994 when the March 31 stocks were reported at 19.173 mmt. Farm stocks in Canada grew 73.8% in the past year to 14.155 mmt, while commercial supplies fell by 5.2% to 3.193 mmt. The average April through July 31 disappearance over the past five years is calculated at 7.430 mmt, which could imply an ending stocks figure in the neighborhoods of 9.9 mmt, which is slightly higher than the 9.5 mmt currently forecast by Agriculture and Agri Food Canada (AAFC).

Durum inventories as of March 31 were reported at 3.904 mmt, up 32% from the 2.957 mmt reported for March 31 2013. This is just above the 3.5 mmt five-year average, while the highest since 4.638 mmt were reported in March 2010. Again, commercial stocks are 30.8% lower year/year, while on-farm stocks are 66.8% higher. The average April-July disappearance over the past five years has been 1.726 mmt, which would suggest a 2013/14 carry-out in the neighborhood of 2.2 mmt, which is in line with the current AAFC forecast of 2.3 mmt.

Canola stocks as of March 31 grew 99.1% to a record 9.018 mmt, the largest year-over-year gain reported for any crop. The March inventory is larger than the size of the entire crop produced as recent as eight years ago! A Commodity News Service trade survey suggested the average range of estimates for March 31 would range between 8.1 and 8.7 mmt, so stocks did prove to be slightly larger than estimated.

As with wheat, the growth in stocks has taken place on-farm, with commercial stocks falling 9.8% to 1.174 mmt, while farm stocks grew by 143% to 7.844 mmt. The average April-through-July 31 disappearance over the past five years has been 4.3 mmt, suggesting a carry-out in excess of 4 mmt unless a well-above average pace of exports is maintained through the balance of the crop-year.

The March 31 barley inventory was reported at 4.346 mmt, 42.8% above year-ago levels. March 31 stocks were just over 5 mmt as recent as March 2010, so the current level of supplies is not unheard of in this case. 92.3% of this inventory is being held on farm, with the smallest ever March 31 commercial stocks reported at 336,000 mt. The average of April-through-July disappearance over the past five years is 2.4 mmt, which would imply a carry-out in the vicinity of 1.9 mmt which is below the most recent AAFC estimate of 2.5 mmt although supports a year-end inventory which is well above last year's estimated 810,000 mt.

Oat inventory as of March 31 was reported at 2.288 mmt, up 59.9% from year-ago levels and the largest stocks since March 31, 2009 when supplies were reported at 2.720 mmt: 91.6% of these stocks were held on farm, with stocks in Alberta increasing 15.3% to 415,000 mt, stocks in Manitoba increasing 25.6% to 245,000 mt and stocks in Saskatchewan climbing 181% to 1.350 mmt from year-ago levels. The average April through July 31 disappearance over the past five years has been 983,000 mt, which would imply a 1.305 mmt carryout on July 31, which is in line with the current AAFC forecast of 1.425 mmt.

Soybean supplies were reported at 1.244 mmt as of the end of March, down 13.6% from year-ago levels. This is the smallest March 31 stocks reported since March 2009. The largest year-over-year change is seen in Ontario's farm stocks, which are down 99,000 or 19.3% from year-ago levels.

Lentil inventories are reported to be 41.3% below year-ago levels at 648,000 mt, the lowest inventory reported since March 2010 when inventories totaled 405,000 mt: 81.5% of this total or 528,000 mt are estimated to be on-farm, below the five-year average of 794,000 mt held by producers on-farm. The average disappearance for the April through July period over the past five years is 469,000 mt, which implies a year-end carryout of 179,000 mt, which would be the lowest lentil carryout since July 2010 when 40,000 mt were carried out, while also in line with the current AAFC target of 200,000 mt.

The largest reduction in year-over-year March 31 stocks of the major grains was seen for canary seed, reported at 39,000 mt, which is 54.1% below the 85,000 mt reported for March 2013. This would reflect the lowest March 31 stocks reported in Stats Canada data seen going back to 2000. One-third of this volume is reported within commercial storage, while two-thirds is reported to be on-farm. The five-year average disappearance for canary seed over the April-through-July 31 period is 71,000 mt, almost twice the level of March 31 stocks, which suggests the dire need to ration supplies for the balance of the crop year and should be supportive for price.

The March 31 inventory of sunflower seed was reported at 25,000 mt, down 52.8% from year-ago levels. This is the lowest March 31 inventory seen in two years when 14,000 mt were reported for March 2012. Commercial supplies are estimated to be down very slightly from year-ago levels to 7,000 mt while inventory on farm is estimated to be 60% lower at 18,000 mt.

Corn supplies as of March 31 were reported at 7.998 mmt, 18% above year-ago levels and a record for the end of March. Commercial stocks across the country grew by 9.7%, while on-farm inventory grew 21% to 6 mmt. The largest growth in on-farm inventory on a volume basis has taken place in Ontario, where inventory grew by 21.7% to 3.5 mmt, over half of the farm inventory, while Manitoba inventory grew by 117%, the highest percentage growth, to 650,000 mt.

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

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