Canada Markets

One underlying theme across the grain and oilseed markets today is the expected growth in global ending stocks over the upcoming crop year, seen in today's corn and soybean data and to a lesser extent, the wheat market. The wheat market suffered an additional blow with United States ending stocks for both 2013/14 and 2014/15 above expectations as well as the USDA's May estimates.

As seen on the attached chart, ending stocks are forecast to grow 2.56 million metric tonnes or 1.4% globally in the upcoming crop year to 188.61 mmt, after increasing 10.77 mmt or 6.1% between 2012/13 and 2013/14. The expected growth in 2014/15 stocks is by a narrow margin only, which could easily be challenged in future reports.

While global production exceeded consumption by 10.8 mmt in 2013/14 according to USDA estimates, 2014/15 will see this gap narrowed substantially, with production forecast to exceed consumption by just 2.5 mmt. Global production for 2014/15 was increased 4.6 mmt from the May forecast to 701.62 mmt, with a drop in the U.S. of .58 mmt offset largely by gains in the European Union (1.37 mmt), China (1 mmt), Russia (1 mmt) and India (1.85 mmt). Canada's all-wheat production was left unchanged at 28.5 mmt.

Global consumption is estimated to fall 4.14 mmt to 699.06 mmt in 2014/15, largely due to declining feed consumption due to the growth in corn supplies.

Two crops to watch due to weather-related issues are Australia and Russia. Australia's government forecaster pegged its crop at 24.6 mmt this week, almost 1 mmt below the USDA, with warnings that hot and dry weather could take further tolls. Russia has also struggled with a moisture deficit in southern regions. While the Russian crop was pegged at 53 mmt by the USDA today, an unconfirmed social media communication suggested a range of trade analysts' forecasts for the Russian crop of 39.9 mmt to 59.4 mmt, potentially leaving the USDA on the high side. Relief in the way of moisture is expected in the upcoming days.

Also of interest in today's data release is the concentration of stocks in the hands of the eight major exporters, namely, Argentina, Australia, Canada, European Union, Kazakhstan, Russia, Ukraine and United States. Ending stocks in these nations are currently forecast to grow for the second consecutive year, from 30.1% of the global total in 2013/14 to 30.4% in 2014/15, a three-year high although below the 10-year average of 36.5%.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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