Canada Markets

Statistics Canada boosted the size of Canada's overall crop production from the September estimates released Oct. 3, with the size of Canada's wheat and canola crops exceeding pre-report trade estimates going into this report.

Canada's all-wheat production was reported at 29.281 million metric tonnes, 22% below last year's record crop but above expectations, with a Commodity News Service survey indicating pre-report estimates ranging from 27.4 to 28.1 mmt. This volume is well above both five- and 10-year averages.

By class, spring wheat production was 20.1% lower than 2013/14 while durum production was down 20.2% from last year. Lower production was realized due to a combination of lower harvested acres along with lower yields. Spring wheat production at 21.222 mmt is also above five- and 10-year averages, while the durum estimate of 5.193 mmt is also above longer-term averages and near the middle of the range of estimates.

This report could be viewed as negative for wheat, with the HRS contract under pressure in recent trade. AAFC recently lowered Canada's export potential by 500,000 mt to 18 mmt in its November supply and demand report, which could result in higher than expected ending stocks.

The next biggest crop, canola, came in well above pre-report estimates, which suggested national production ranging from 14 to 14.9 mmt as compared to the 15.555 mmt reported. Total production was 13.4% below last year's record crop but 7.8% above the five-year average production. Canola's harvested acres were reported to be .8% higher than last year, while yield at 34.4 bpa came in above long-term averages although 14% below the average yield reported for 2013.

Higher than expected supplies may result in further pressure on the canola market which has closed lower over each of the past six sessions although was able to stabilize and post a modest gain today. While exports are currently ahead of the pace needed to achieve the 8.4 mmt target set by AAFC, this target is almost 700,000 mt below last year's export volume while data for the past two shipping weeks released by the CGC reflected weak export movement. Domestic crush is also below potential with one of the west's largest plants shut down.

Barley production in Canada was left unchanged from the October report and is reported at 7.119 mmt, 30.5% below year ago levels. Record low acres combined with above average yields has resulted in record low production, which will continue to support the barley market. Western feed markets face the benefit of feed wheat supplies on the prairies, although a combination of logistical challenges and a lack of producer selling has seen the barley market rally over $200/mt delivered southern Alberta after seeing prices dip into the mid 160's in early fall. AAFC's expected carryout of 700,000 mt is well below last year's carryout of 1.9 mmt and the five year average of 1.6 mmt.

Oat production came in higher than expected, with 2.908 mmt reported, above the highest trade estimate of 2.8 mmt while below the five-year average of 3 mmt. Oat production is down 25.6% from year-ago levels with both harvested acres and yields reported below year-ago levels. This could help boost ending stocks above current estimates, currently estimated at 600,000 mt, below last year's 1 million metric tonnes and the five-year average of 847,000 mt.

Pulse crop production was reported below year-ago levels, with dry pea production down 13% and lentil production down 15.5% from 2013. This comes as a result of lower yields this season, with dry pea harvested acres up 10.4% and harvested acres of lentils up 12.4%. Dry pea production estimates slipped slightly from the October report to 3.445 mmt, which will be supportive if not bullish for prices given the current blistering pace of pea exports. The current AAFC estimated carryout shows just 125,000 mt carried out of this crop year, just 3% of estimated demand, down from 309,000 mt from last year and the five-year average of 438,600 mt.

Despite a 12.4% increase in lentil acres, yield was reported to be 24.8% lower than last year to result in a 1.837 mmt crop, down 15.5% from last year although above long-term averages. Current supply/demand tables issued by AAFC suggest a 50,000 mt carryout at the end of this crop year, well below last year's 169,000 mt and the five-year average of 441,200 mt.

Both popular cropping choices this spring, soybeans and flax production was reported higher than achieved in 2013. The 2014 soybean crop was reported at 6.049 mmt, a record crop which is 12.9% above year-ago levels. This came about as a result of a 20.2% boost in harvested acres along with a 6% drop in yield to 40.2 bpa. Total production is 31.9% above the five-year average, with year/year increases in harvested acres seen in Ontario (17.9%), Manitoba (20.6%) and Saskatchewan(62.5%).

Flax was also viewed as a popular cropping choice, with today's report cutting production from October's report to levels below pre-report trade estimates. Production was reported at 847,000 mt, slightly below the range of trade estimates which expected production to fall in the 900,000 to 1 mmt range. This volume is well above five- and 10-year averages and comes as a result of a 45.5% increase in harvested acres combined with a 19.6% drop in estimated yields to 22.2 bpa. Current ending stocks estimates are pegged at 125,000 mt, below the five-year average of 158,000 mt, which may tighten further and add support to the flax market.

Corn production was reported at 11.487 mmt, 19.1% below 2013 and below the five-year average. Corn's harvested acres were 17.1% lower in Canada, with cuts seen in Ontario (15.8%) and in Manitoba (34.7%). This year's yield was down 2.4% from last year at 149.2 bpa while remaining well above the five- and 10-year average.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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