Canada Markets

Agriculture and Agri-Food Canada's May supply and demand estimates took into account the latest official estimates from Statistics Canada, including the March planting intentions based on producer surveys as well as the March 31 grain stocks report. As a result, the estimate for Canada's July 31 grain stocks (Aug. 31 for corn and soybeans) was revised lower overall to 9.755 million metric tons (mmt) for all principal field crops. This is down 31.3% from 2019-20 and according to Statistics Canada data, the lowest in eight years. When one considers the 2012-13 stocks for principal field crops are estimated only 30,000 metric tons (mt) lower at 9.725 mmt, current stocks are bordering on being the tightest seen in Statistics Canada data going back to the 1979-80 crop year.

This month's changes to 2020-21 forecasts included a 500,000 mt lower revision in wheat stocks (excluding durum) to 4 mmt due to increased feed demand, while durum stocks were revised lower by 60,000 mt due to an increased in forecast exports. Other small changes included a 100,000 mt lower revision in corn stocks, a 5,000 mt upward revision for flax, a 100,000 mt lower revision for soybeans, while stocks of both peas and lentils were revised lower by 50,000 mt. It should also be noted that current forecasts place both barley and oat stocks at record lows, while estimates for some smaller crops such as lentils and flax are relatively close to the lowest on record.

Given AAFC's forecasts for 2021-22, stocks of all principal field crops are to grow by 5% overall to 10.255 mmt, which still remains viewed as tight in historical data. This includes a 6.6% or 580,000 mt in the major grains and oilseed stocks and an 8.5% or 80,000 mt drop in stocks of pulses and special crops.

The attached chart shows the forecast year-over-year change in stocks for the major crops. Of the crops shown, stocks of peas, soybeans, oats and corn are forecast to fall year-over-year. Stocks of flax, canola and wheat (excluding durum) are to show a modest recovery year-over-year. These increases would disappear with the slightest drop in yield from the averages used by AAFC, leaving all other estimates unchanged.

As seen on the attached chart, the largest year-over-year increases in stocks are forecast for durum and barley. According to AAFC, global trade in durum is to fall by 7% in 2021-22 due to a recovery in production in both Europe and North Africa. The largest increase in stocks is seen with a 100% increase in barley stocks, from 500,000 mt in 2020-21 to 1 mmt in 2021-22. At 1 mmt, stocks would still be lower than the current five-year average (2015-16 to 2019-20) of 1.326 mmt.

Statistics Canada's estimate for 2021 barley acres could see a higher revision ahead. At the same time, AAFC has included a lower export forecast for the crop year ahead, which could also be revised higher. The USDA's earliest look at China's corn imports for 2021-22 show imports unchanged year-over-year, while the recent flurry of daily sales of U.S. corn sold to China signals intent for the year ahead.

It should be noted that the bar for lentils does not appear on the attached chart. This is because AAFC has left their forecast for ending stocks for 2021-22 unchanged from the previous year at 100,000 mt. While this is not the lowest stocks seen in Statistics Canada data, stocks remain tight and could tighten further.

Wishing all a happy and safe Victoria Day long weekend!

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

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