The February version of Agriculture and Agri-Food Canada's supply and demand estimates found in the Canada: Outlook for Principal Field Crops report could involve more guesswork than normal, with Statistics Canada merchandise trade data for December delayed by one month to March 6 due to the U.S. government shutdown.
After revisions were made, which included Statistics Canada's Dec. 31 stocks data released earlier in the month, the estimate for ending stocks for all Canadian principal field crops was lowered by a modest 68,000 metric tons, to 14.277 million metric tons. This month-over-month change is shown by the green bar on the attached graphic. The blue bars represent the most significant month-over-month changes shown across the principal field crops.
Ending stocks for oats were revised 50,000 mt lower, to 600,000 mt, the lowest in six years, given a continued rapid pace of exports and an upward revision in expected domestic use since last month. Projected ending stocks represent 16.5% of disappearance (exports plus domestic use), which compares to the five-year average of 25%. Current forecasts for 2019-20 call for a modest increase in seeded acres leading to increased production along with slightly lower demand, while ending stocks are forecast to remain steady at 600,000 mt. Prices are forecast to remain steady next crop year. This will be one market to watch.
Barley ending stocks were revised 100,000 mt lower this month to a record low of 900,000 mt. A 250,000 mt upward revision in exports, to 2.7 mmt, is only partially offset by a lower revision in domestic use over the crop year. Current data points to forecast stocks to disappearance at 10.3%, which compares to the five-year average of 18.7%. Current forecasts for 2019-20 include a 10.4% increase in area seeded and slightly higher yields, with increased production offsetting an increase in expected export and domestic demand, allowing for a 39% increase in 2019-20 stocks, to 1.250 mmt. The range of prices for cash barley is forecast to fall by $30/mt, to $210 to $240/mt in the upcoming crop year; any threats to the crop's potential will be supportive for prices.
The largest change in ending stocks to any crop was seen in dry peas, with a 400,000-mt increase in expected exports since January's forecast offsetting a downward revision in domestic demand leading to a 250,000 mt downward revision in stocks to 400,000 mt. Such a level would represent a 38.3% drop from the previous crop year and just slightly lower than the five-year average. Given a forecast for similar acres and yields and slightly lower exports for 2019-20, ending stocks are forecast to fall again in 2019-20 to 250,000 mt, which would be the lowest level in four years.
February was not as friendly for oilseed stocks. In the case of soybeans, an upward revision of 250,000 mt of soybean imports is expected to offset a 100,000 mt increase in forecast crush, leading to an expected 150,000 mt increase in ending stocks, to 550,000 mt. While this is roughly 100,000 mt lower than estimated for 2017-18, it is 32% higher than the five-year average. Current forecasts for 2019-20 call for a modest 3.2% drop in soybean acres seeded in Canada, lower production and demand leading to a modest 75,000-mt drop in ending stocks by the end of 2019-20, while the range of expected producer prices is expected to increase from $10 to $20/mt from the current crop year.
As seen in the attached chart, ending stocks of 2018-19 canola was increased by 200,000 mt this month, to 2.5 mmt, following a 200,000-mt lower estimate for exports to 10.8 mmt, which would leave stocks unchanged from 2017-18. This seems an optimistic forecast given Statistics Canada's report of record stocks in-store as of Dec. 31, while exports continue to disappoint. Week 29 exports were reported at just 69,800 mt, the lowest weekly volume in six weeks, while cumulative exports are 394,200 mt, or 6.7% below the pace set in 2017-18. An improvement in exports will be needed in order to reach this target, while a case for stocks of 3 mmt or higher can be made, given the current pace of demand, which will weigh on 2018-19 and 2019-20 balance sheets.
Cliff Jamieson can be reached at email@example.com
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