Canada Markets

There are many ways to look at today's July estimates of production of principal field crops report released by Statistics Canada.

Some would suggest that due to the timing of the data collection in late July and early August, the process has underestimated production potential due to favorable growing conditions throughout August. At the same time, the wary would suggest that it's a long time until harvest, and adverse weather could affect overall production potential, especially with the crop running 10 days to two weeks behind in many areas.

At 30.562 million metric tonnes, the all-wheat estimate was above pre-report trade estimates of 29 to 30.3 mmt and also 12.3% above last year's 27.205 mmt. You have to go back to 1991 since this level of production was realized, when production reached 31.945 mmt. The record was set in 1990 when 32.098 mmt was produced.

Spring wheat production is estimated at 21.830 mmt, 16.6% higher than 2012. The overall Canadian spring wheat yield is forecast at 43.1 bushels per acre which is a record for this crop, just slightly above the 42.8 bpa set in 2011. Provincially, yield estimates range from 43.8 bpa in Manitoba, 38.2 bpa in Saskatchewan and 49.9 bpa in Alberta.

The canola estimate came in at 14.735 mmt, within the Dow Jones range of trade estimates of 14.2 mmt to 16 mmt, although many are still convinced that a greater-than-15 mmt crop is on the way. Even the 16 mmt level has been put forward, given ideal conditions through harvest. The ideal conditions in August allowed for an extended flowering stage, with later crops in some areas still flowering. The 14.735 mmt crop would be a record, over and above the 14.608 mmt produced in 2011.

The average yield across the country is pegged at 33.7 bpa, above the five-year average of 33 bpa. Estimated yields range from 33.2 by/ac in Manitoba, 31.2 bpa in Saskatchewan and 38 bpa in Alberta. Canola rallied at the release of the report, although has since backed off from highs reached, as the market is more prone to movements in the soybean market than anything else.

The durum wheat production estimate was 5.117 mmt, within trade estimates of 4.6 to 5.3 mmt. Average yield was set at 38.2 bpa, which remains below the 39 bpa reached in 2011. Given that recent supply and demand tables form Agriculture Canada have used a production figure of 4.8 mmt, this slightly higher production figure may lead to increased stocks in the upcoming year.

At 8.807 mmt, barley production was at the higher end of trade estimates, while the oat forecast of 2.907 mmt dipped slightly below trade estimates, which should be supportive for oat prices. The estimated production for oats is only slightly below the five-year average for the crop, although estimated yields of 79.4 bpa could achieve a record yield for oats.

Corn production is set to increase less than 1% over last year, at 13.075 mmt, with a slight dip in Ontario production and a 12.8% increase in production in Manitoba. Soybean production is forecast to decline 2.7% to 4.798 mmt, despite a 22.2% surge in production in Manitoba to 928,000 mt.

Canary seed production was pegged at 114,300 mt. This is below the five-year average production of 159,880 mt and the smallest production since 2001. At the same time, production is above the 75,000 mt used by Ag Canada in their recent supply and demand tables. Canary seed supplies at the end of this year should remain critically tight which should support price.

Mustard production was reported at 157,400 mt, which is 32.7% higher than last year's production and is only slightly below the five-year average production of 160,000 mt. Ag Canada's recent supply and demand tables utilized an estimated production figure of 130,000 mt, so this higher estimate should help bring stocks to a more comfortable level.

Lentil production was reported at 1.573 mmt, 6.8% above 2012 and above the five-year average of 1.498 mmt. Dry pea production was reported at 3.304 mmt, 16.7% ahead of 2012 production and very close to the five-year average production.

As one comment on Twitter suggested, this data may be quickly forgotten as markets digest day-to-day weather forecasts and their effects on the maturing crops across North America. Things look good on paper, although the challenge now will to bring it home.

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

(ES)

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