Canada Markets
AAFC's October Supply and Disposition Update: The Key is in the Details
Agriculture and Agri-Food Canada's (AAFC) October Supply and Disposition update contained relatively minor adjustments to the carry-out stocks figures, but upon closer inspection, one finds some very interesting details.
Worth noting, this represents the final estimates for all 2023-24 crop year totals and incorporates the Oct. 8 Statistics Canada's release of the Supply and Disposition for corn and soybeans in Canada (crop year ended Aug. 31). As was the case last month, the 2024-25 production estimates come from Statistics Canada's Sept. 16 Model Based Principal Field Crop Estimates. It is also worth noting that the Canadian Grain Commission's quality survey found the quality of the 2024 Western Canadian crop is generally fair to good.
The most intriguing details are found in the barley results, both old and new crop, with canola and wheat to a lesser extent. Relatively minor changes were delivered for the remaining crops.
The barley adjustments highlight the difficulties that face the Western Canadian feed sector, competing with export interests for limited supplies at a time when prices are discouraging production. For the 2023-24 crop year, AAFC only reduced carryover stocks by 70,000 metric tons (mt) but in getting there, they cut exports by 248,000 mt while increasing feed, waste and dockage (FWD) by 332,000 mt.
That still leaves FWD use below 2022-23 by 393,000 mt with exports off by 826,000 mt.
Where it gets interesting is with the 2024-25 figures. The only adjustment made there was a 71,000-mt cut in FWD use compared to last month's update, offsetting the smaller beginning stocks level and leaving carry-out stocks unchanged.
The problem is how does FWD use fall another 363,000 mt year over year, with exports down an additional 314,000 mt, to leave carryover at the tight levels of 700,000 mt?
With exports already 192,000 mt over last year, as of the first nine weeks of the crop year, these assumptions might be an issue. Regarding the combined national feed use, total coarse grain FWD use is projected to decline by 436,000 mt compared to last year with all wheat being the only offsetting source. FWD use up by 197,000 mt in that case.
The latter point also presents challenges given the high quality of this year's crop in general. Without a reduction in livestock, these assumptions may be subject to revisions in the future. Interesting times.
Canola is more about the big picture than the monthly adjustments. The only significant change for 2023-24 was found in the FWD category, revised higher by 354,000 mt and resulting in a similar drawdown in carry-out stocks.
With the lower carry-in canola stocks and a small reduction of FWD, carry-out stocks for 2024-25 fell to 2.2 million metric tons (mmt) from 2.5 mmt last month. The interesting part to watch is with the export estimates. They are projected to be 817,000 mt higher than 2023-24 at 7.5 mmt, but in just the first nine weeks of the crop year the exports totaled 2.336 mmt compared to just 0.873 mmt last year. At this pace, a revision higher needs to be watched for in the reports.
Looking at wheat, final 2023-24 durum wheat carry-out stocks were reduced 169,000 mt from last month on stronger exports, food and industrial as well as FWD. That doesn't seem like much but on a small crop, it was almost a 30% reduction in carry-out stocks for the year.
Given the large production increase for 2024-25, new crop carry-out is still expected to increase significantly to 900,000 mt from last year's 407,000 mt. With the decreased beginning stocks, that estimate is 150,000 mt below last month's 1.05 mmt carry-out stocks figure.
Mitch Miller can be reached at mitchmiller.dtn@gmail.com
Mitch Miller can be reached at mitchmiller.dtn@gmail.com
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