Canada Markets

AAFC Trims 2022-23 Wheat Stocks

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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December hard red spring wheat broke out higher from a range traded over almost eight months. Today's gain saw price breach $9/bu, while closing above the 61.8% retracement of the move from the October high to the May low, calculated at $9.00 3/4/bu. The first study shows the Dec/March spread at minus 4 1/4 cents, stronger than normal for this week. The lower study shows a noncommercial net-long position held for a third consecutive week. (DTN ProphetX chart)

Agriculture and Agri-Food Canada's July Canada: Outlook for Principal Field Crops supply and demand estimates saw a downward revision made in both wheat and durum stocks estimates for 2022-23, with all-wheat stocks revised 440,000 metric tons (mt) lower at 3.540 million metric tons (mmt).

The government reduced their forecast for durum stocks from 480,000 mt to 290,000 mt, reported to be a record low. Exports of durum were revised 200,000 mt higher this month to 5 mmt. The Canadian Grain Commission reported 4.968 mmt of exports was achieved as of week 50 data through licensed facilities, while week 51 and 52 data could see easily see exports surpass the 5 mmt mark.

In addition, AAFC trimmed their forecast for wheat ending stocks by 250,000 mt to 3.250 mmt, reported to be the third lowest on record. This was due to an upward revision in forecast feed use by the same volume. It is interesting to note that the forecast for exports was left unchanged this month at 19.650 mmt, with cumulative exports as of week 50 at 18.9123 mmt.

The wheat forecast bears watching. Week 50 licensed exports were high at 408,300 mt, while data for two shipping weeks remains. In addition, by the end of May, unlicensed exports are calculated at 767,460 mt while this study overlooks the export of flour. It would appear that exports of 20 mmt remain achievable.

As seen on the attached chart, ending stocks are forecast to fall by a modest 123,000 mt year-over-year to 3.540 mmt. Since AAFC released its very first forecast for 2022-23 in January of 2022, this is the very first month that points to a year-over-year drop in the forecast for all-wheat stocks.

Another change in stocks made for the current crop year was seen for corn. The government forecast increased its forecast for corn exports by 200,000 mt and for feed use by 200,000 mt. This was partially offset by a 200,000 mt increase in forecast imports, while ending stocks of corn was reduced by 200,000 mt to 2.2 mmt, down 546,000 mt from the previous crop year.

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