Statistics Canada released its first official estimates for the 2019-20 crop year on Wednesday, based on surveys conducted between July 4 and Aug. 5.
Canada's all-wheat production is estimated at 31.251 million metric tons, down 950,000 metric tons or 2.9% from 2018, while 2.9% higher than the five-year average. This could be viewed as a surprise in today's data, with pre-report estimates leaning towards a year-over-year increase in production, with one media source pointing to a range of pre-report estimates from 32 mmt to 34.108 mmt. Agriculture and Agri-Food Canada released an estimate of 32.5 mmt in August.
Spring wheat production is estimated at 25.108 mmt, up 1.166 mmt or 4.9% from 2018/19 and would be the largest spring wheat crop produced in six years. The average spring wheat yield is estimated at 50 bushels/acre, down from 51.4 bpa estimated for 2018, after both 2017 and 2018 yields were revised higher while adding roughly 824,135 metric tons to the combined production over the past two years. Today's data likely added to the bearish pressure in the spring wheat market, with the December contract reaching a fresh contract low, while noncommercial traders hold a record net-short position in spring wheat.
This season's variability is seen in Manitoba spring wheat yields, estimated down 2.3% to 59.7 bpa (54.06 bpa), Saskatchewan yields down 6.8% to 44 bpa (44.3 bpa) while Alberta yields are estimated 1.5% higher at 53.2 bpa (53 bpa), with five-year averages in brackets.
Durum production is estimated at 4.420 mmt, down 23.1% from 2018-19, while 23.9% below the five-year average and at the lower-end of pre-report estimate. The average yield is down 0.7 bpa to 34.1 bpa, the lowest estimated yield in 11 years. This drop in yield is most noticed in Alberta, where the average yield is estimated down 3.7 bpa to 31.9 bpa, following what is reported as a 1-in 50-year drought in the southern areas of the province. This durum production estimate is roughly 700,000 mt below the current estimate used by AAFC, which already points to a 25% drop in stocks to 1.2 mmt in 2019-20, while indicating that stocks will fall well below 1 mmt unless there is a surprise in the level of July 31 stocks.
Another source of the miss in the wheat production estimate may be seen with the winter wheat estimates. Canada's winter wheat production is estimated at 1.7245 mmt, down 31.4% from 2018-19. Only 68.3% of the area seeded last fall is forecast to be harvested, the lowest percentage in reported data going back to 1986. This situation is most pronounced in Ontario, where a challenging spring led to abandonment with only an estimated 65.4% of the crop forecast to be harvested.
Canada's canola production was estimated at 18.453 mmt down 1.89 mmt or 9.3% from 2018-19. This volume falls closer to the lower-end of the range of trade estimates from 18 mmt to 20.5 mmt, the lowest production in four years and 3.9% below the five-year average. Seeded acres were estimated to fall by 8.2% in 2019, while the average Canadian yield is forecast to fall by 0.4 bpa, to 39.4 bpa, which is equal to the five-year average. Manitoba's average yield is forecast to increase by 2.5 bpa from 2018, Saskatchewan's yield is to fall by 2.2 bpa and Alberta's yield is forecast to rise by 1.3 bpa. Production is estimated close to current AAFC estimates, which would suggest that 2019-20 ending stocks will remain close to unchanged from the estimate for 2018-19 crop year, unless a major change in 2018-19 July 31 stocks is announced on Sept. 6. Canola futures ended modestly higher in Wednesday's trade, with the November contract up $1.50/mt.
Canada's oat production is estimated at 3.953 mmt, up 15% from the previous crop year and would represent the largest production since 2008. The country's oat seeded acres were earlier estimated to rise by 18% to 3.6 million acres, while the Canadian average yield is estimated at 89.6 bpa, down 0.1 bpa from 2018-19 and slightly higher than the five-year average. One point worth watching, Statistics Canada estimates that 79.4% of the crop will be harvested, down from 81.3% in 2018 but higher than the five-year average of 79%. The dry conditions on the Prairies has led to a feed shortage which could result in more oats cut as green feed that does not appear reflected in today's data. Wednesday's production estimate is similar to the current AAFC estimate for 2019-20, which indicates that stocks will grow by 50% over the crop year to a more comfortable 600,000 mt.
Barley production was estimated at 9.644 mmt, up 15.1% or close to 1.3 mmt higher from 2018 while 19.1% higher than the five-year average. This would be the highest production in six years and very close to the current AAFC estimate for production. Current AAFC supply and demand tables forecast barley stocks to increase 70.6%, to 1.450 mmt, in the crop year ahead.
Dry pea production was estimated at 4.528 mmt, up 26.5% from 2018, 15.9% above the five-year average and the upper-end of the range of pre-report estimates. This estimate is 228,000 mt higher than the current AAFC estimate, while suggests the potential for a larger build in stocks over the upcoming crop year than expected. Lentil production was estimated at 2.384 mmt, up 13.9% from 2018 and also slightly higher than AAFC's current 2.2 mmt production estimate.
Statistics Canada estimated Canada's corn production at 13.606 mmt, down 2% from 2018. Despite a 2.3% increase in forecast harvested acres across the country, the average yield is forecast to fall by 6.4 bpa to an average of 148.2 bpa, which would be the lowest in five years, with production also the lowest in five years. Average yield in Quebec is forecast to fall by 10.2 bpa, to 140.2 bpa, Ontario's average yield is to fall by 9.9 bpa, to 156.1 bpa, the lowest in seven years, while Manitoba's average yield is poised to increase by 17.7 bpa, to 130.9 bpa, the largest in three years. A great deal of growing season remains and bears watching. This production estimate is roughly 600,000 mt below the current AAFC estimate, which may point to a larger-than-expected drop in Canada's corn ending stocks.
Today's soybean estimate came in at 6.204 mmt, down 14.6% from 2018 and the lowest production in five-years. Canada's seeded acres were previously estimated to fall by 9.6%, to 5.714 million acres, while the country's average yield is forecast to fall by 2.3 bpa, to 40.2 bpa, slightly below the five-year average of 41.7 bpa. While Ontario, the largest grower, is forecast to boost soybean acres by 3% to 3.114 million acres, the province's average yield is forecast to fall by 15%, to 43.6 bpa, the lowest in 10 years. The opposite was seen in Manitoba, where the seeded acres fell by 417,500 acres in 2019, while the average yield is estimated at 32.5 bpa, up from 31.1 bpa last year. The current production estimate is 471,000 mt lower than the estimate used in AAFC's supply and demand tables, while pointing to the need for curtailed exports and a smaller-than-expected carryout, assuming there are no surprises in year-end stocks.
In summary, Statistics Canada points to a year-over-year drop in all-wheat production, along with canola, corn and soybeans. Other major crops, including barley, peas, lentils and oats, are expected to see production rise in 2019-20.
On Sept. 6, Statistics Canada will release its estimates for July 31 stocks, which may help shed light on total available supplies for 2019-20. On Sept. 12, Statistics Canada will release its model-based production estimates. Focus will quickly turn to the delayed harvest as many crops continue to face the risk of frost and the eastern prairies faces wet weather, with Saskatchewan to release its weekly Crop Report on Aug. 29 and Alberta on Aug. 30.
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