Canada Markets

AAFC's October Supply and Demand Estimates for Selected Grains

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart points to the change in AAFC's forecast ending stocks for 2018-19 as reported in September's report (blue bars), October's report (brown bars) while compared to 2017-18 ending stocks (grey bars). Of the selected grains, durum, canola and peas are expected to see stocks build over the upcoming crop year. (DTN graphic by Cliff Jamieson)

Agriculture and Agri-Food Canada has released updated supply and demand tables in its Canada: Outlook for Principal Field Crops Report for October. The report took into account data from Statistics Canada's model-based production estimates released in late September, along with ending stocks estimates released for corn and soybeans in early October.

The report stated that the challenging harvest on the Prairies is not taken into account in this report, with potential effects to both crop yield and quality overlooked for now.

The attached graphic shows changes in forecast ending stocks of selected crops as reported in the September report and the October report, while compared with the most recent estimates for the previous 2017-18 crop year. This time last month, analysis in this space was critical of the government's September data release because it was released two days in advance of Statistics Canada's model-based production reports, which has led to wild gyrations in estimates for the 2018-19 crop. This is perhaps most evident on the chart when one compares the ending stocks estimates (blue bars vs. brown bars) for crops such as durum, corn and canola.

As seen on the attached chart, ending stocks of wheat are forecast at 4 million metric tons for 2018-19, unchanged from September and below the five-year average of 5.7 mmt. A hike in expected production is offset by a hike in the estimates for both exports and domestic feed demand, to 18 mmt and 4 mmt respectively. This export forecast continues to lag projections based on the first 11 weeks of activity, with cumulative exports up 28.8% from the same period last crop year, while also trailing the USDA's all-wheat export estimate of 24 mmt by 1.4 mmt.

The October report saw the durum production estimate increase by 672,000 metric tons from the September estimates, given Statistics Canada's model-based estimates, while the durum market faced a double-whammy with a reduction in estimated exports for the 2018-19 crop year. Exports were estimated at 4.6 mmt this month, down 200,000 mt from last month, while the cumulative exports as of week 11 continue to show exports well behind the steady pace needed to reach the revised target and further revisions may lie ahead. Ending stocks are forecast to rise by 8% to 1.6 mmt, above the five-year average of 1.424 mmt.

Perhaps the largest roller-coaster ride has been seen in estimates released for canola. Estimated canola production has swung from 20.3 mmt in August to 19.2 mmt in September and up to 21 mmt in October, based on the latest Statistics Canada estimates. Ending stocks were revised as low as 1.250 mmt in September just days in advance of Statistics Canada's production estimates, while this month were hiked to 2.5 mmt. This level was achieved despite a 500,000 mt hike in estimated 2018-19 exports to 11.5 mmt, while cumulative exports are trailing the 2017-18 pace by 15.7%, when only 10.9 mmt was exported. Ending stocks are forecast to increase by 4.6% to 2.5 mmt, while compares to Statistics Canada's five-year average of 2.3 mmt.

As expected, ending stocks for corn were increased to 2.2 mmt for 2018-19, from 1.750 mmt last month. A combination of higher production reported by Statistics Canada along with an upward revision in 2017-18 ending stocks led to the move, while despite a 200,000-mt hike in 2018-19 exports to 1.8 mmt and a 200,000-mt drop in expected imports to 1.4 mmt. Ending stocks have averaged 2 mmt over the past five years.

A combination of higher production estimates and a downward revision linked to Statistics Canada's 2017-18 soybean stocks, along with an upward revision in Canada's export potential to a record 5.7 mmt, has led to a downward revision in 2018-19 stocks to 450,000 mt. This is from 705,000 mt reported in September. This is just slightly higher than the five-year average of 416,000 mt.

As seen on the attached chart, forecasts for ending stocks of barley, oats and peas have been revised higher this month from the volumes reported in September, with stocks of barley and oats expected to fall year-over-year, while stocks of peas are expected to climb from 2017-18 levels.


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