Canada Markets

The International Grains Council's monthly Grain Market Report dated Aug. 17 includes a small reduction in the forecast for global grain production from the previous month (wheat and coarse grains), while at 2.294 billion metric tons, is up 1% from 2022-23 and would be the second-largest crop on record next to the 2.295 billion metric ton crop estimated for 2021-22.

Global demand is estimated to rise 1.8% to 2.307 billion metric tons, while exceeding global production by the largest volume in three years. Global stocks are to fall by 2.2% to 584 million metric tons, or 25.3% of global use.

The IGC notes Canada as one of three countries where production prospects have been revised lower, which also includes China and the European Union.

Ahead of Statistics Canada's first official estimates for the season to be released on Aug. 29, the attached chart includes recent estimates by the IGC and the USDA, while compared to AAFC's unofficial estimates and the 2022-23 production estimates.

While the estimates that matter are what is actually coming off the field, harvest activity is in very early stages while precipitation forecast for the Prairies next week will further slow progress. The IGC's estimates for Canada may be some of the lowest seen so far. For example, on Aug. 17, Commodity News Service commentary on ProphetX reported trade estimates for the canola crop to range from 16.5 mmt to 19 mmt, while the IGC has estimated the crop even lower at 16 mmt. Indeed, the market is signaling concern, with the potential for the November contract to settle above $800/mt this week for the first time in three weeks.

The IGC's revisions this month included a 2.5 mmt lower revision to the forecast for Canada's all-wheat production to 31.5 mmt and a 2.1 mmt lower revision for canola to 16 mmt. These are the lowest estimates seen on the attached chart.

It is interesting to note that the IGC notes that the cuts may not be over. IGC notes that further downside is likely in its commentary for canola production, while noting "private crop ideas were at much lower levels" in its discussion surrounding Canada's durum crop.

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

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