Canada Markets

AAFC Boosts Overall Demand for Principal Field Crops

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The blue bars represent the total production of Canada's principal field crops, as measured against the primary vertical axis on the left. The red line with markers represents the estimated crop-year carryout, as measured against the secondary vertical axis on the right. The black marker indicates the estimated 12.275 million metric ton carryout for 2015/16. (DTN graphic by Nick Scalise)

Monthly supply and demand data from Agriculture and Agri-Food Canada incorporated Statistics Canada's Dec. 4 production statistics which pointed to a much larger Canadian crop overall, as was widely expected.

As seen on the attached chart, production of Canada's principal field crops reached 83.9 million metric tons in 2015, up 3% from 2014 and the second largest crop in history after the 97.9 mmt crop produced in 2013. Total grain and oilseed production is estimated to increase 2.9 mmt or 3.9% from 2014 to 83.853 mmt while total production of special crops and pulses production is expected to fall 5% or 327,000 metric tons to 6.257 mmt, largely given a drop in dry pea acreage and yields.

Given the 7.2 mmt hike in production of all principal field crops from the November estimates due to the improved outlook released by Statistics Canada, projected exports for all principal field crops for 2015/16 were increased by 3 mmt and projected domestic disappearance was hiked by 1.262 mmt, with ending stocks for 2015/16 revised higher from the November estimates to 12.275 mmt, as seen on the attached chart, down for the second straight year.

Canada's wheat exports (excluding durum) have been revised higher to 17 mmt, up 1 mmt from last month and a level which represents a 9.4% drop from 2014/15. As of the CGC's week 19 statistics, licensed exports of wheat are 3% ahead of last year's pace and 374,000 mt above the cumulative volume needed to reach this revised target (licensed exports only). Ending stocks for wheat were left unchanged from last month's estimate of 3.5 mmt, down 42.9% from 2014/15 and similar to the 3.557 mmt reported to have been carried out of 2007/2008.

Despite the upward revision in durum production of 645,000 mt by Statistics Canada, AAFC left the forecast exports unchanged at 4.2 mmt given a rebound in both global and U.S. production. As of week 19, cumulative licensed exports are just marginally below the cumulative volume needed to reach the 4.2 mmt target. Ending stocks are expected to jump by 32% to 1.3 mmt which remains below the 10-year average of 1.7 mmt.

The Dec. 4 Statistics Canada report saw Canada's canola production estimate jump by 2.9 mmt from the previous estimate to 17.2 mmt, the second largest crop ever. AAFC reacted by increasing potential exports to 9.5 mmt, which would reflect a record level of exports and up 1.5 mmt from last month. Domestic demand has also been increased by 784,000 mt to 8.4 mmt, with crush pegged at 8.2 mmt, also a record level.

As of week 19, cumulative exports are 124,000 mt ahead of the cumulative pace needed to reach the revised export target, with exports as of week 19 being 10.8% ahead of the year-ago pace. As of the week ending December 16, COPA's cumulative crush is reported at 3 mmt, while is 147,000 mt below the cumulative volume needed to reach this revised target.

Estimates for ending stocks for canola have been revised higher to 1.750 mmt, down 24.6% from 2014/15, slightly below the 10-year average, dropping for the second consecutive year.

With production of soybeans increased, estimates for both export and domestic demand for soybeans has also increased since the November report, with export demand forecast at 4.1 mmt, up 300,000 mt since the November estimates, while crush demand was increased by 100,000 mt to 2 mmt, leaving ending stocks falling to 350,000 mt from the 466,000 mt carried out of 2014/15.

Other cereals such as barley, corn and oats saw production levels increase while export potential for oats was left unchanged and the potential for corn and barley was trimmed, leaving a year-over-year increase in ending stocks for all three crops.

While the estimated production for the major pulse crops and special crops has been increased since the November report, production remains slightly behind 2014 levels while strong demand will continue to see aggressive movement of these crops. Total exports have been increased by 240,000 since November to a volume of 6.065 mmt, a level slightly higher than achieved in 2014/15. Ending stocks will remain extremely tight for most crops.

DTN 360 Poll

This week's poll asks what you think about Statistics Canada's recent estimate of 17.2 million metric tons for 2015 canola production. Do you believe it? You can weigh in with your thoughts on DTN's 360 poll found on the lower right of your DTN Home Page. We would like to thank all those for their past contributions to DTN polls.

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