Canada Markets

July 31 marks the final day of the 2018-19 crop year for all grains except for corn and soybeans, which follow the Sept. 1-through-Aug. 31 crop year.

The attached chart plots a projected ending stocks estimate for select grains based solely on the historical relationship between commercial stocks reported by the Canadian Grain Commission for week 52 and the final ending stocks estimate released by Statistics Canada. This projection is then compared with the most recent ending stocks estimates released by Agriculture and Agri-Food Canada, as indicated by the brown bars.

It is interesting to see how the projections for wheat and durum are close to current government estimates. Over the past three years, commercial stocks of wheat reported for week 52 ranged from 42.8% to 59.1% Statistics Canada's final July 31 stocks estimate, while averaging 51.8% of total stocks. Projecting forward based on the recently released week 51 commercial stocks (assuming that week 52 will be similar), ending stocks are projected at 3.644 million metric tons (mmt), which compares to the current AAFC estimate of 3.6 mmt.

Using this same logic, the last three years have seen commercial stocks of durum reported for week 52 range from 42.9% to 52.9% of total stocks, while averaging 46.5% of total stocks. This calculation leads to July 31 stocks of 1.432 mmt, which compares to the 1.6 mmt estimate released by AAFC.

One figure that will be closely watched in Statistics Canada's July 31 stocks report on Sept. 6 will be the canola estimate. AAFC's most recent estimates call for a record 3.9 mmt ending stocks estimate, up 56% from the 2.5 mmt carried out of 2017-18. Skeptics will point out that despite this significant build in stocks, line companies offered premiums and begged for deliveries in order to load cars, while questioning the inflated views of stocks being reported.

As seen on the attached graphic, commercial stocks of canola in week 52 have ranged from 33.4% to 54.9% of total July 31 stock over the past three years, while averaging 43.4% of year-end total stocks. This historical average would project total July 31 stocks of 2.348 mmt, significantly lower than the government's 3.9 mmt estimate. There is a great deal of room for actual stocks to land somewhere within this range.

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

Follow him on Twitter @Cliff Jamieson

(AG)

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