Canada Markets

With next week's Dec. 4 production update from Statistics Canada just around the corner, there may be reason to believe that production in Western Canada will be increased from the September estimates released in early October.

The first reason to suspect this is that there is a long-term tendency towards conservative estimates found in the October report based on the September estimates. From a previous study found in this column, I've indicated that on average over the past five years, the final canola yield was 16.3% above the September yield estimate, while the dry pea yield was 12.6% over the September estimate on average. While the early cereal estimates tend to be closer to the final yield estimates, final wheat yields averaged 5.7% above the September estimate and final durum yields averaged 5.2% higher than the September estimate over the past five years. Barley was one crop where yields tended to be over-estimated in the October report, with final yields tending to be 1.1% lower.

One more hint that final production may be increased in the west is due to the fact that provincial government yield estimates in both Saskatchewan and Alberta are reported higher than the September estimates reported by Statistics Canada. For example, Saskatchewan Agriculture pegged the provincial yield for spring wheat at 46 bushels per acre, above Statistics Canada's 42.9 bpa average for the province. Sask Ag's durum yield estimate is 4.3 bpa higher than the current Stats Canada estimate, barley is estimated at 5.2 bpa higher than Stats Canada and canola yields are estimated at 2.8 bpa higher than Stats Canada.

A similar case can be presented for Alberta yields as compared to the Statistics Canada September estimates. Leaving harvested acreage constant, these yield differentials would add approximately 500,000 mt to Alberta's production while adding an additional 2.7 mmt to Saskatchewan's overall harvested volume.

The attached chart clearly shows this year's massive crop size in western Canada as compared to historical production. The red bar represents the 10-year average production of the major crops grown in western Canada, totaling 52.3 mmt. The yellow bar indicates the current production announced by Statistics Canada on Oct. 4, which is 27.9% above the 10-year average at 66.9 mmt. The green bar indicates the potential for a greater than 70 mmt production of the major crops in the west given a constant acreage while using provincial yield estimates.

Finally, trade estimates all along have called for a canola crop which has ranged much higher than reported by Statistics Canada in October. An 18 mmt estimate was the upper end of the trade estimates prior to the release of the Statistics Canada current estimate of 16 mmt. An additional 1 mmt of canola production alone would perhaps not be a huge surprise to many in the industry.

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

(ES)

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