Canada Markets

The most recent May Agriculture and Agri-Food Canada estimates show Canada's wheat stocks (excluding durum) expected to fall by 51% from 2014/15 to 3 million metric tons as of July 31, with the country's wheat stocks (excluding durum) projected to reach the lowest levels since the Dirty Thirties, as reported by the Western Producer.

Despite this forecast, deliveries remain strong. Week 44 saw prairie producers deliver 405,400 metric tons of wheat into the licensed handling system in the week ending June 5, the highest deliveries seen in nine weeks. This is 129,400 mt, or 24%, below the same week last year but just 21,000 mt, or 4.9%, below the three-year average for the same week.

As seen on the accompanying graphic, licensed prairie elevator stocks were reported at 1.0444 mmt as of week 44, or the week ending June 5, 20.4% below last year's inventory while roughly 3,000 metric tons above the three-year average. As seen on the graphic, elevator stocks tend to tighten as one would expect through spring seeding, with this crop year's week 42 low of 819,700 mt 21% behind the low reached last crop year and 15% below the five-year average.

The Friday, June 10, USDA report released a similar projection for Canadian stocks as indicated in AAFC's projections, estimating Canada's all-wheat stocks at 3.86 mmt, unchanged from their May report. This is in-line with current AAFC estimates with wheat ending stocks at roughly 3 mmt and durum ending stocks at roughly 860,000 mt.

Wheat stocks may end higher than currently forecast given the current pace of exports. Wheat exports remain well behind the pace needed to achieve the current AAFC target of 17.5 mmt (excluding durum). As of week 44, cumulative wheat exports fell 1.05 mmt behind the pace (licensed exports only) needed to reach the annual export target of 17.5 mmt, with only eight weeks of data, or 15%, of the crop year remaining. This shortfall is reduced with close to an additional 470,000 mt of unlicensed exports reported by the Canadian Grain Commission.

The pace in wheat exports has slowed in recent weeks and may have implications for the balance of the crop year. Over the past four weeks, cumulative exports have fallen from 694,138 behind the cumulative pace needed to reach the current export target of 17.5 mmt (licensed exports only) to 1.048 mmt behind the cumulative steady pace needed to reach the current target.

AAFC should release updated supply and demand tables this week, with adjustments to wheat tables possible.

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

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