Canada Markets

Statistics Canada's initial production estimates were sharply lower from both 2020 and the five-year average for most crops, to no one's surprise, although the question remains whether the cuts were large enough.

For the first time, this report was a model-based report, based on a July model, which will be followed up by estimates from an August model to be released on Sept. 14, the first time that model-based estimates have been released back-to-back.

As seen on the attached chart, estimated production for all Canadian principal field crops is 73.825 mmt, the first year-over-year drop in four years, while 26% below the volume estimated for 2020-21. This would be the largest year-over-year percentage drop seen since 1988. At the same time, estimates for small crops such as sunflower seed, dry beans and canary seed were not released this month, along with estimates for small producing provinces and will be included in the December final.

The agency estimated Canada's all-wheat production at 22.948 million metric tons (wheat plus durum), slightly higher than the mid-point of the range of pre-report estimates. This is down 35% from the 35.2 mmt produced in 2020 and 29.5% below the five-year average, the smallest crop produced in 14 years or since 2007. In recent weeks, the USDA estimated Canada's crop at 24 mmt, while Agriculture and Agri-Food Canada's recent unofficial estimates were pegged at 20.2 mmt.

Spring wheat production was estimated at 16.102 mmt, down 37.7% from 2020 due to a decline in both seeded acres and expected yields. This is also the smallest production realized since 2007. The 30.7% drop in estimated Canadian yield to 37.1 bushels per acre is made up of a drop ranging from 8.5% in Manitoba to 39.1% in Alberta. Statistics Canada has estimated Alberta's yield at 34.6 bpa, higher than the province's 30.2 bpa dryland yield estimate, although the province's final yield estimated has averaged 4.8 bpa below the final Statistics Canada estimate for the province on average over the past five years.

Durum is estimated at 3.998 mmt, the smallest crop since 2010 or 11 years. This is within the range of pre-report estimates, 39.2% last year and 33.6% below the five-year average. Seeded acres were reported earlier this summer down 2.7%, while the average yield of 27.2 bpa is down 31% from last year and 29% below the five-year average.

The one bright spot in Canada's wheat estimates is seen for winter wheat, with winter wheat production estimated at 2.847 mmt, up 2.8% from 2020 and the largest winter wheat production in four years. This is largely due to a 4 bpa increase in Ontario's winter wheat yield when compared to 2020, offsetting yield losses across the prairie provinces, with an estimated 90% of Canada's winter wheat production expected to be produced in Ontario.

Canola production was estimated at 14.749 mmt, closer to the upper-end of the range of pre-report estimates. Last week's unofficial AAFC estimate pegged the crop at 15 mmt, while there are trade estimates reported as low as 11.5 mmt. This would be the smallest canola crop in 9 years, down 24% from last crop year and 27% below the previous five-year average.

Included in today's estimates was an upward revision in Canada's 2019 canola production of 305,300 mt and an upward revision of 765,000 mt for 2020, tempering the bullish 2021 statistics.

As Alberta Agriculture has released estimated dryland yields over a number of weeks, it is interesting to compare the province's reports to today's Statistics Canada's estimate. As of Aug. 24, the province estimated the average canola yield at 24.9 bpa, which compares to today's official 29.9 bpa estimate for the province. During the past five years, the Alberta government's last provincial estimate has been reported at a level that was within 1 bpa of the official estimate. This spread bears watching.

Barley production is estimated at 7.836 mmt, down 27% from last year and 15% below the five-year average, while the smallest crop produced in seven years. The lower production is despite a 9.7% increase in acres seeded this spring and signals tight 2021-22 supplies following what is expected to be an extremely tight carryout as of July 31. One concern with the barley data is that current estimates point to 94.5% of the acres being harvested in 2021, which is higher than the five-year average of 89.7%. There have been various reports over recent weeks that some cereal crops have been salvaged for feed, while Statistics Canada will not be able to account for this drop in acres until the final estimates is released in December.

Oat acres are estimated at 3.07 mmt, down 33% from last year and 20% below the five-year average, while would be the smallest production seen since 2014. This spring's seeded acres were reported down 10.8% from 2020, while the average yield is estimated down 22% from one year ago. Like barley, the estimate for harvested acres would suggest that roughly 81% of the crop will be harvested, higher than the five-year average. Given the challenges faced from prairie feed shortages, it is likely that the harvested acre estimate will be reduced when the final estimates are released in December.

Dry pea production is estimated at 2.627 mmt, closer to the lower-end of the range of pre-report estimates from 2.5 mmt to 3.8 mmt. This production would be down 43% from last year and down 38% from the five-year average, while the smallest production seen in 10 years. Seeded acre estimates released earlier this spring show acres down 10.2% this season, while the average yield is estimated at 25.9 bpa, down 36% from last year.

Lentil production is estimated at 1.979 mmt, down 31% from last year and 25% below the five-year average. This would be the lowest production realized in nine years. This spring's seeded acres were reported 1.7% higher than 2020, while the estimated yield is down 31.4% from 2020 to 1,030 lbs/acre, the lowest reported yield in 18 years or since 2003.

Canada's soybean production is estimated at 5.823 mmt, the lowest production seen in eight years, down 8.4% from 2020 and 15% below the five-year average. This spring, Statistics Canada estimated Canada's seeded acres to increase by 4.9% to 5.321 million acres, with an increase seen across all producing provinces. Canada's average yield is to fall to 40.5 bpa, down from 46.3 bpa in 2020 and the five-year average of 42.6 bpa. Yield losses are seen across the major producing provinces, with an estimated year-over-year drop of 5.8 bpa for Quebec, 2.4 bpa for Ontario and 14.6 bpa for Manitoba.

Canada's corn production is estimated at 13.677 mmt, climbing slightly higher for a second year, up 0.8% from 2020 and 0.6% below the five-year average. This spring, Statistics Canada estimated seeded acres to fall 2.5% year-over-year, while the country's average yield is forecast to rise by 4.9 bpa to 158.4 bpa. Yield gains for both Ontario and Quebec are forecast to offset losses in production forecast for Manitoba, while some Twitter comments indicate that yields in Ontario may be understated.

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

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