Canada Markets

As the U.S. futures adjust to higher-than-expected stockpiles of both corn and soybeans as reported in Monday's USDA Quarterly Stocks report, this week's Statistics Canada Production of Principal Field Crops report could possibly deliver yet another blow to the markets with the possible release of a sharp increase in production, which is expected since the July producer survey was conducted.

Alberta's latest crop report suggests most crops will achieve an average yield which is 20 to 25% higher than the five-year average, with 29% of the crop yet to be harvested as of Sept. 27. Saskatchewan Agriculture has released yield estimates which represent the average yields for the 71% already harvested as of Sept. 23. These yields are also significantly higher than the five-year averages for the reported grains.

So how would a 20% increase in yields over the five-year averages across the Prairies impact total Canadian production levels, leaving estimated seeded and harvested acres unchanged from previous reports?

A Prairie canola yield which reflects 20% over the respective five-year averages over the Prairie provinces would generate an additional 2.6 million metric tonnes of seed, which would lift estimated production to 17.4 mmt. This compares to Statistics Canada's 2011 record production of 14.608 mmt. There are current estimates for the crop to reach or exceed 17 mmt, with at least one estimate suggesting an 18 mmt crop is a possibility.

A Prairie barley crop where yields exceed the five-year average by 20% would result in an incremental 920,000 mt of production. Total estimated production would be in the vicinity of 9.9 mmt, which would be the highest production since 2008. With barley stocks already expected to increase by 50% to reach 1.2 mmt as suggested by Agriculture and Agri-Food Canada's supply and demand tables, this could lead to the largest barley carryout since July 2010.

A 20% increase in yields over the five-year average for oats would lead to an incremental 370,000 mt across the Prairies. Total production could reach 3.4 mmt, which would be the largest production level since 2008.

Should peas achieve a prairie-wide yield which exceeds the five-year average yield by 20%, total production would increase by 360,000 mt, to reach an estimated total production of 3.66 mmt, which would achieve a record production level for the crop. With carry-out stocks in 2013/14 already forecast to almost double from the 2012/13 levels, this additional production could weigh heavily on the market.

Should durum yields across Saskatchewan and Alberta reach a level which is 20% above their respective five-year averages, an incremental 718,000 mt of production could be generated. This, on top of an already expected 5.117 mmt of 2013/14 production estimated by Stats Canada, would result in a total production of approximately 5.835 mmt, which would make this the largest crop since 5.915 mmt was produced in 2005.

A 20% bump in the five-year average yield of spring wheat would lead to an incremental 3.1 mmt of wheat produced in the three Prairie provinces, given the current estimates for seeded and harvested acres. Added to the current Statistics Canada forecast for spring wheat production in 2013/14, this would result in a 24.9 mmt crop, the largest since 1992.

Eyes will be on Statistics Canada this Friday as they release their latest production estimates for the 2013/14 crop year. With grain supplies already growing in size across the continent, it is quite likely that the markets will not be receptive to what could be a substantial boost to Canadian production this week.

How were the yields on your farm or in your area? You can weigh in on DTN 360 found on the DTN Home Page.

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

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