The first of two-crop production forecasts was released by Statistics Canada on Friday. Today's report is the production of principal field crops, July 2018, based on producer surveys that were conducted with a reported 13,110 producers across Quebec, Ontario and Western Canada's Prairies in a period ranging from July 6 to Aug. 1. The next report is scheduled for release on Sept. 19, the model-based principal field crops estimates.
As can be seen on the attached chart, Friday's estimates call for a smaller production than 2017 for most crops (blue bars), as well as smaller than the five-year average, as seen with the brown bars. Of the major crops, modest year-over-year increases in production of barley (1.3%) along with durum (1.4%) were reported, while year-over-year declines range from 2.2% in corn to 41.5% in rye.
According to Statistics Canada estimates, prairie grain production will dip 5 million metric tons, or 7%, to 66.6 mmt, down 4% from the five-year average and the lowest in three years.
Canada's all-wheat production was estimated at 28.987 mmt, down 997,000 mt or 3.3% from 2017, with a year-over-year increase in estimated durum production (1.4%) failing to offset a modest decline in spring wheat production (2.7%) and a larger decline in winter wheat production (16.1%). This estimate was within the range of pre-report estimates released by media, suggesting a range of 29.3 mmt to 30.9 mmt. For each prairie province, an increase in estimated harvest acres was offset by declining yields, with Manitoba spring wheat yields of 51.4 bpa being 1.2 bpa below the five-year average, Saskatchewan's average yield of 41 bpa down 3.3 bpa from average and Alberta's estimate of 51.1 bpa down 3.1 bpa from average.
The hot and dry conditions in the southern Prairies perhaps took a greater toll on durum production than expected. Durum production is estimated at 5.034 mmt, up a modest 1.4% despite an 18.8% increase in estimated acres. This level of production falls far short of pre-report estimates reported by media ranging from 5.6 mmt to 5.8 mmt. It is also interesting to note that Statistics Canada's estimate for Saskatchewan durum points to a yield of 30.3 bpa, slightly higher than the 29 bpa estimate released by Saskatchewan Agriculture this week. Given today's estimates, production would be 800,000 mt lower than current AAFC supply and demand estimates that could lead to ending stocks dipping below 1 mmt for the first time in three years if current demand estimates remain intact.
An estimated decline in acres (1.7%) and yield (8.5%) is expected to lead to a 10.2% decline in canola production in Canada, with the 19.2 mmt estimate being the lowest production in three years and just 1.6% higher than the five-year average yield. This falls within the range of pre-report estimates reported by the media of 18.1 to 21.3 mmt. Concerns may exist that the record-breaking temperatures that reached many areas of the Prairies in August were not captured in this survey, while Statistics Canada's Saskatchewan yield estimate of 36.5 bpa remains above the 33 bpa estimate released by Saskatchewan Agriculture this week. This level of production is roughly 1 million metric tons below current AAFC estimates, suggesting that ending stocks for 2018/19 could approach 1 mmt, given current demand estimates. Canola futures moved higher this session, up $2.70/mt at the time of writing, but down from session highs. A weaker Canadian dollar trade also supports the market this session.
Despite higher yields of soybeans expected on average across the country as compared to 2017, a sharp drop in estimated harvest acres of 13.7% has led to soybean production estimated at 7 mmt, down 9.2% from 2017 but still 9% higher than the five-year average. This is the first year-over year-drop in production seen in Canada in 11 years, with Quebec production up an estimated 7.4%, while Ontario's production is estimated to fall by a modest 3.6%, Manitoba's production estimated down 21% and Saskatchewan production down 37.7%.
Statistics Canada estimated Saskatchewan's yield at 27.4 bpa, higher than the Saskatchewan government's 23 bpa estimate released this week, so continued dryness on the Prairies through August may leave Statistics Canada estimates overstated. At the same time, Statistics Canada estimated Ontario yields at 44.9 bpa, which is below the record 50.2 bpa estimate released by a private crop tour this week, which suggests that official estimates for the east may be understated.
A combination of a modest increase in harvested acres estimated for corn and a year-over-year decline in yields is expected to result in a modest 2.2% drop in the country's corn production. It is interesting to note that Statistics Canada's estimate for Ontario yield fell from 167 bpa to 160 bpa from 2017 to 2018, while a private crop tour over the past two weeks concluded on Thursday by announcing a record high yield of 179.5 bpa. Manitoba's corn yield is expected to dip by a modest 1% from last year to 126.9 bpa, although hot, dry conditions in August has led to continued stress for this crop.
Production of both dry peas and lentils were estimated slightly below the pre-report range of estimates. Dry pea production is estimated at 3.635 mmt, down 11.6% from last year and 4.4% below the five-year average. Statistics Canada shows an average Saskatchewan yield of 33.6 bpa, while this week's Saskatchewan estimate was 39 bpa, suggesting that perhaps somewhere in the middle lies the final yield. Lentil production was estimated at 2.167 mmt, down 15.3% from last year and 13.6% below the five-year average, with Statistics Canada yield estimates for Saskatchewan in line with that province's estimate released on Thursday. Given current AAFC demand estimates, both markets should see a year-over-year drop in ending stocks.
Today's report estimates barley production at 7.992 mmt, up 1.3% from last year but down 5.7% from the five-year average production. Estimated yield is sharply lower than the current estimates used by AAFC, which suggests that stocks will tightly significantly below 1 mmt over the next crop year, given the current demand estimates.
Cliff Jamieson can be reached at email@example.com
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