Canada Markets

Saskatchewan's final crop report was released yesterday with final yield estimates tweaked by the Department of Agriculture. It's not often that you can realize a yield jump that exceeds the previous 10-year average by more than 30% as seen in the province's analysis, but that is exactly what is being reported at this time.

Comparing the lower blue bars on the attached chart which represent the 2003 to 2012 average yields, to the highest purple bars, which represent Saskatchewan Agriculture estimates, we see that spring wheat yields are estimated 35% above the 10-year average, durum 36% higher, oats 32% higher, barley 35% higher, flax 40%, canola 36% and peas yields are estimated to be 39% higher than the 10-year average.

Also added to the chart is the recent release from Statistics Canada from what they refer to as "experimental indicators" found in the Crop Condition Assessment Program (CCAP). As seen in the red bars on the attached chart for the four crops evaluated in this program, yield indications in this program fell below both the official September estimates released by Statistics Canada as well as the Saskatchewan Agriculture estimates.

While the September estimates released by Statistics Canada signaled a huge crop on the Prairies, Sask Ag's final estimates signal the potential for the final November Statistics Canada estimates, to be released on Dec. 4, to be revised higher. Using Sask Ag's provincial yield estimates combined with the current forecast for harvested acres from Statistics Canada would add approximately 789,000 mt of wheat, 497,000 mt of durum, 213,000 mt of oats, 271,000 mt of barley, 641,000 mt of canola and 181,000 mt of peas to the respective balance sheets which may weigh heavily on some markets. Revisions to the production potential for Manitoba and Alberta will further add to Prairie supplies.

While supplies are set to increase on paper, grain logistics on the Prairies remain a challenge. Prairie elevators are suggested to be near capacity, while elevators are reported to be receiving half of the cars requested. While railways are suggested to be reaching a weekly car-spot that may have been viewed acceptable in past years, their abilities are challenged given the massive size of this crop. As stated by David Prezdnowek of the CWB, "The issue is not the performance of the railways so far, it's the fact that the railways may be able to service 5,000 cars per week, but the open order book may be double that size, so the shortfall on both railways is growing ..."

Logistical challenges have the ability to further snowball with a pending labor dispute at CN Rail. Either a strike or a lockout could occur after Oct. 28.

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

(ES)

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