Canada Markets

Canada Exports Wheat at a Rapid Pace

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
Connect with Cliff:
The blue bars represent weekly shipments of Canadian wheat (excluding durum), with another banner week reported for week 11. The red line represents the volume needed each week to reach the current AAFC forecast, both plotted against the primary vertical axis. The black line represents the steady pace needed to reach the current AAFC forecast of 19.2 mmt while the green line represents the actual cumulative pace, both shown against the secondary vertical axis. (DTN graphic by Cliff Jamieson)

The Canadian Grain Commission reported 558,400 metric tons of wheat exported in week 11, which is the week ending Oct. 18 (excluding durum). This is the highest weekly volume shipped this crop year and roughly 200,000 mt higher than the volume needed this week in order to stay on track to reach the current Agriculture and Agri-Food Canada forecast of 19.2 million metric tons.

Cumulative exports are reported at 4.4982 mmt as of week 11. This volume is up 30.9% from the same period in 2019-20, up 30.5% from the five-year average, while roughly 1 mmt higher than both. Longer term, this volume is 37.6% higher than the 10-year average, which is the highest volume shipped over this 10-year period.

The blue bars on the attached chart shows shipments in four of the first 11 weeks exceeding 500,000 mt. Weekly volumes in 2019-20 exceeded 500,000 in four weeks of the shipping year, the first in week 40 and the last in week 50. Note that this ignores the 755,500 mt shipped in the combined weeks of week 20-22. There were two shipping weeks in 2018-19 where this volume was achieved, one week in 2017-18 and none in 2016-17.

The chart also shows the actual pace of shipments through licensed facilities (upward-sloping green line) is ahead of the steady pace needed to reach AAFC's current crop year forecast of 19.2 mmt, which is close to unchanged from the total exports of 19.128 mmt shipped in 2019-20. Note that the crop year totals include unlicensed exports and the export of flour in addition to the licensed shipments shown on the chart. Licensed exports alone are roughly 437,000 mt ahead of the pace needed to reach the current forecast.

Another factor to consider is the seasonality of wheat shipping. Over the past five-years, an average of 19.3% of Canada's wheat shipments were achieved through licensed facilities as of week 11. Projecting this pace forward, this would represent crop year exports of 23.3 mmt, considerably higher than the current forecast. Of course, this would be dependent on available supplies and producer selling. In 2019-20, only 17.9% of total exports were realized, as of week 11, a pace that projects forward to an even higher 25.1 mmt.

Despite the rapid start, AAFC's monthly supply and demand tables did not show a revision in crop year exports, choosing to leave exports unchanged from last month at 19.2 mmt, only 72,000 mt higher than achieved in 2019-20.

What is interesting is that this month's government estimates included the prior-year production estimates for 2018-19 and 2019-20 based on Statistics Canada revisions made in September, something that AAFC missed or purposely omitted in its Sept. 24 forecast tables. This resulted in ending stocks being revised higher this month for 2018-19, 2019-20 and 2020-21. The current crop year forecast shows stocks revised 300,000 metric tons higher from last month to 5.5 mmt, up 15.5% or 737,000 mt from 2019-20. For some reason, stocks are seen growing year-over-year, while exports are seen steady, despite the current rapid pace of movement.

AAFC is taking a cautious approach to its 2020-21 forecast and will either signal a considerable slowing of movement ahead or an upward revision in the export forecast. This bears watching.

**

DTN 360 Poll

This week's poll asks which crop you think has the most bullish potential in the 2020-21 crop year? You can weigh in with your ideas on this poll located on the lower-right side of your DTN Canada Home Page.

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

Follow him on Twitter @Cliff Jamieson

Comments

To comment, please Log In or Join our Community .