Canada Markets

Canadian stocks reports may not necessarily draw significant interest, although there are some very interesting signals coming out of today's release of the March 31 Canadian Grain Stocks, which reflects the first two-thirds of the crop year for most grains.

Media polls of the trade prior to the release of this report indicated that March 31 all-wheat stocks would be down 3-5 million metric tons from the previous year's March 31 stocks of 18 mmt, while they were actually down 4.310 mmt, to 13.792 mmt, down 23.8% from last year and 38.5% lower from two years ago. This is the tightest all-wheat stocks reported since March of 2008.

By far the largest change in stocks was seen in the wheat (excluding durum), with a year-over-year drop of 27.3% to 11.221 mmt, while a 39% drop from March 2014. According to Statistics Canada data, disappearance of wheat in the April-through-July period last year totaled 9.326 mmt, while averaged 8.215 mmt over the past five years, suggesting that ending stocks will likely fall in the 2 mmt to 3 mmt range, as compared to the current AAFC estimate of 3 mmt. This takes us back to stock levels not seen since perhaps the 1930s, while indicates the Prairies are out of wheat. DTN staff in the U.S. has already heard U.S. mills referring to tight Canadian stocks in recent weeks.

Durum stocks are also lower, but not nearly to the same extent. Durum stocks were reported at 2.571 mmt, down 3.3% from last year and the tightest stocks exported since March 2008. Disappearance in the April-through-July period last year was 1.702 mmt while over the past five years averaged 1.757 mmt, while the current export pace is 6% behind last year's pace as of week 39 data. Ending stocks should fall below last year's 956,000 mt and could even rival the 809,000 metric ton carryout at the end of the 2007/08 crop year, while the current AAFC target is 1 mmt. Once again, U.S. DTN staff has noticed U.S. mills concerned about tightening Canadian stocks, with high quality in short supply.

Canola stocks, as of March 31, were reported at 7.491 mmt, down 10.1% from last year and the tightest stocks seen since March 2013. Last year's disappearance in the April-through-July period totaled 6 mmt, while current exports and crush remain ahead of last year at record levels. Ending stocks could fall in the 1 mmt to 1.35 mmt range, with the latter being the current AAFC estimate.

Barley stocks at the end of March were reported at 3.831 mmt, a two-year high and up 12.1% from March 2015. 2015 disappearance in the April through July period totaled 2.185 mmt while averaged 2.3 mmt over the past five years, suggesting the potential for a 1.6 mmt to 1.7 mmt carryout this crop year, which is in-line with the current 1.6 mmt estimate reported by AAFC.

Oat stocks, as of March 31, were reported at 1.828 mmt, up 9.3% from last year and also a two-year high. Disappearance has totaled 1 mmt both last year and on average over the past five years, indicating the potential for ending stocks to land in the neighborhoods of 800,000 mt, close to the current 850,000 mt estimate released by AAFC.

Perhaps the most disappointing number was seen in flax, with 571,000 mt on hand at the end of March, up 49.5% from last year, the highest volume reported since 2009/2010. Last year's April through July disappearance totaled 285,000 mt while was 235,000 mt on average over the past five years, which suggests that this year's carryout will grow significantly from the 97,000 mt estimated for 2014/15. AAFC's current estimate is 180,000 mt, which could be revised higher this month.

The aggressive export pace of pulses has left March 31 stocks tight, especially for lentils. Lentil stocks were reported at 416,000 mt, down 64.1% from the same date last year and the tightest since March 2010. The front-loaded export program will fizzle soon unless more production is found on the Prairies, with the five-year average disappearance totaling 643,000 mt in the April-through-July period, while close to 800,000 mt was shipped last year.

Dry pea stocks were reported at 1.243 mmt, the tightest level since March 2012 and down 28.1% from last year. The April-through-July period in 2015 resulted in 1 mmt of disappearance, equal to the five-year average, suggesting that ending stocks could fall close to the 200,000 mt mark, which would be tighter than the current AAFC estimate of 400,000 mt.

The market was expecting larger corn stocks, which represents the first seven months of the row-crop crop year. Stocks were increased 23.4% over last year to 7.763 mmt, a two-year high. Soybean stocks declined 15.2% in the past year to 1.763 mmt, a two-year low.

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

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