Canada Markets

Agriculture and Agri-Food Canada Updates its Oulook

By Cliff Jamieson , Canadian Grains Analyst

Agriculture and Agri-Food Canada (AAFC) released its Canada: Outlook for Principal Field Crops on Tuesday, which provides a first glimpse of Canada's supply and demand tables utilizing the seeding intentions data from Statistics Canada's March intentions of principal field crop areas that was released April 24.

The primary challenge for this report is that the seeding intentions data was obtained from producers between March 25 to April 3, while inclement weather since could call into question some of the data obtained.

As expected, one of the largest swings in acreage and production is seen in the all-wheat data. With the all-wheat planted acreage (including durum) set to rise by 12.3%, the forecast ending stocks of 6 million metric tonnes for 2013/14 are 300,000 mt higher than the April Supply and Demand tables and 1.1 mmt higher than the forecast for 2012/13. Breaking this down further, durum ending stocks are expected to increase 100,000 mt to 1.2 mmt in 2013/14 from the previous year, while wheat stocks other than durum are expected to grow by 1 mmt to 4.8 mmt.

This report tightened the 2012/13 durum carryout forecast by 200,000 mt to 1.1 mmt. This is consistent with my look at durum S & D's in the Canada Markets Blog May 14 which suggested that durum disappearance for the last four months of the crop year over the last several years combined with this year's pace of exports would suggest the durum carryout could conceivably fall to 1 mmt if not slightly lower.

While many have questioned the sharp move higher in wheat acres, it may also be the durum acres that are in jeopardy given the planting delays faced in many growing areas. In time, I believe we will find that the durum acres did not meet the earlier planting expectations.

In terms of production, AAFC has pegged all wheat production at 29.4 mmt, which compares to the USDA's 29 mmt and the forecast of 28.1 mmt by private forecaster Lanworth which utilizes satellite imagery technology.

The other big story on the Prairies coming from the March intentions report was a forecast 11.1% drop in canola acres, as reported by Statistics Canada in April. This move has prompted AAFC to lower their 2013/14 production forecast from 15.5 mmt to 14.1 mmt. This number is also consistent with an Oil World forecast of 14.5 mmt as reported yesterday. Ending stocks are forecast to increase to 400,000 mt, up from 350,000 mt in 2012/13. Many in the industry are questioning such a sudden drop in acres, given canola's potential returns, although canola rotations have been pushed hard and the crop also turned to be a disappointment in many areas in last year's growing season. Some feel a crop closer to 20 million acres may be more likely, which will make current forecasts on the conservative side.

AAFC lowered the 2012/13 oat carryout in Canada by 275,000 mt to 250,000 mt in the current report due to a 275,000 mt increase in domestic disappearance. This is the lowest level of carryout stocks seen in data going back to 1984. Oat carryout stocks reached 363,000 mt in 2002, which was the last time that stocks have fallen below 500,000 mt. Oat acres are expected to increase by 18.4% from 2012, while may grow even further due to planting delays in certain areas that may look to the shorter-season oat crop once soils dry. Despite higher exports forecast in 2013/14, the oat carryout was left unchanged at 400,000 from earlier forecasts.

Barley acres were forecast to slip 2.2% according to Stats Canada's research, although it is conceivable that additional acres will be seeded in the wetter areas of the Prairies. AAFC reduced barley production by 500,000 mt from their April report for 2013/14, with ending stocks reduced to 950,000 mt, below the April estimate of 1.5 mmt. Adverse weather over the upcoming weeks could still have a tremendous impact on barley acres, with the current CWB estimate suggesting that the Prairie provinces are only 45 to 50% finished seeding, as of May 21.

Given Stats Canada's 7.6% increase in corn planting intentions, AAFC has increased their production outlook for corn by 1.3 mmt from their April estimate. Carryout of Canadian corn is increased by 1.150 mmt from the 2012/13 forecast to 3 mmt. This is a negative for the Canadian corn market and perhaps a record high for corn July 31 ending stocks.

Statistics Canada's decrease in projected pulse and special crop acres of 6.8% from 2012 is projected to lead to a reduction in production of 142,000 mt. Gains in production are forecast for dry peas and mustard, while all other major special crops and pulses are forecast to see a pull-back in seeded acres and production.

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

(AG)

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