Canada Markets

There's a multitude of moving parts in supply and demand estimates for a crop that has yet to be planted. Lots can happen and will. One interesting point in Agriculture and Agri-Food Canada's first look at 2015/16 supply and demand for Canadian grains is the further reduction in wheat stocks, showing just how quickly things can change.

The largest year-over-year change in ending stocks for any of the grains or oilseeds reported when measured in both a percentage change basis and by volume was seen in Canada's wheat balance sheet (excluding durum). Ending stocks are forecast to drop by 1.4 million metric tonnes or 28% to 3.6 mmt from the 5 mmt carry-out forecast for the current 2014/15 crop year.

This is a significant swing given that Canada's wheat stocks more than doubled from 3.9 mmt in 2012/13 to 7.982 mmt in 2013/14 after a winter of dismal rail service slowed export movement and backed up supplies on the prairies. The 2013/14 carryout of 7.982 mmt is the largest carry-out seen in Statistics Canada data seen since 1994 when 9.415 mmt was carried out of the 1993/94 crop year. The 3.6 mmt estimate for 2015/16 would be only slightly higher than the 3.557 mmt carried out of 2007/08 and only the third time since 1980/81 that ending stocks have fallen below 4 mmt.

Of the assumptions made, one is an increase in wheat acres seeded, not including durum. Estimates have pegged wheat acres at 19.521 million acres, up .4% from 2013. As all other grains and oilseeds are also expected to see acres increase from last year, a reduction in summerfallow acres is expected to facilitate this growth in seeded acres. Total supplies are expected to be lower, given a lower carry-in from 2014/15, while total demand has been reduced by 5.4% or 1.5 mmt in order to arrive at the 3.6 mmt ending inventory.

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

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