Canada Markets

Agriculture and Agri-Food Canada faced criticism in July when its crop estimates failed to include the deteriorating conditions faced on the Prairies. Production of Canada's principal field crops was estimated at 95.280 million metric tons for 2021-22, down 3.691 mmt from 2020-21 and revised only 869,000 metric tons lower than the June estimate. AAFC made up for it in its August report, released on Aug. 26, pointing to record low levels of precipitation received on the Prairies this growing season, accompanied by record high temperatures.

Market watchers will question the validity of this report, which is followed by official Statistics Canada production estimates to be released on Aug. 30, based on July producer surveys, which in turn is followed by Statistics Canada's model-based estimates, due for release on Sept. 14. This year in particular may result in a greater focus than normal on the final estimates, due for release on Dec. 3, which will include larger-than-normal revisions to harvested acres estimates due to crops salvaged for feed.

This month, Agriculture and Agri-Food Canada estimated total production of all principal field crops at 71.844 mmt, down 27.127 mmt or 27.4% from 2020-21. This would be the lowest production of all principal field crops since 2010, while the year-over-year percent reduction is the largest seen since a 27.7% year-over-year reduction in production was realized in 1988.

The year-over-year change in estimated production for the seven crops shown on the attached chart accounts for 96% of the expected drop in production of all crops. Of the principal field crops, only corn is expected to see a year-over year increase in production of 14.2 mmt, up 637,000 mt from 2020 due to increased yields.

Today's all-wheat production estimate is shown at 20.179 mmt, down 15 mmt or 42.7% from 2020-21. This is comprised of a 12.265 mmt drop in wheat production and a 2.743 mmt drop in durum production. The USDA recently estimated Canada's all-wheat crop at 24 mmt.

Next to wheat, the largest year-over-year drop in production is seen for canola at 3.72 mmt to 15 mmt. This falls closer to the upper end of estimates circulating in the media, with today's Dow Jones ICE Canada Morning Comment pointing to a range of trade estimates from 11.6 mmt to 16 mmt.

The brown bars on the attached chart indicate the year-over-year reduction in exports forecast this month, with a 10 mmt reduction in Canada's wheat exports, along with 3.9 mmt of canola and 3 mmt of durum.

Canada's grain stocks are estimated to fall by 35.7% year-over-year to 6.690 mmt. This would be the lowest stocks see in Statistics Canada data going back to 1981, while the five-year average (2014-15 through 2019-20) is 14.889 mmt.

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

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