Canada Markets

Statistics Canada's Look at December 31 Grain Stocks

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The tightest supply situation relative to past years as seen in today's Statistics Canada December 31 stocks report is seen in peas and lentils, with stocks the lowest in years and well-below their respective 10-year averages. (DTN graphic by Nick Scalise)

There were no major surprises in todays with Canada's December 31 stocks either within the range of pre-report estimates or close to it. It's important to note that the December 31 stocks are intentionally under-estimated by the volume of grain in transit which Statistics Canada will correct for in its March 31 stocks. Given the smaller crop harvested in 2014, combined with an overall aggressive export pace, total stocks of the major grains are down 9.4 million metric tonnes or 13.5% from December 31 2013.

Canada's all-wheat stocks are reported at 24.818 million metric tonnes, within the range of pre-report estimates although close to the lower end of the range. This volume is 13.5% below the volume reported on Dec. 31 2013, although it is 9% above the five-year average.

Durum stocks are tighter than expected in today's report, with 4.059 mmt suggested to be held on December 31. This is 22.5% below year-ago levels and 10% below the five-year average for stocks on this date. This is below the pre-report range of estimates where stocks were expected to be reported in the 4.126 to 4.2 mmt range. The five-year average disappearance or demand over the January through July period is approximately 2.8 mmt, which would imply a 1.26 mmt carryout which is in line with current AAFC expectations.

The estimate for total canola stocks as of December 31 came in at 11.103 mmt, 10.6% below year-ago levels and 10.7% above the five-year average for this time. This volume is near the higher end of the 9.633 to 11.242 mmt range of pre-report estimates as reported by Commodity News Service. Canola disappearance in the January 1 through July 31 period of 2014 was 10.058 mmt, which implies a potential ending stocks figure of close to 1 mmt should this pace of disappearance be matched, tighter than the 1.4 mmt currently estimated by Agriculture and Agri food Canada.

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Barley stocks for December 31 were reported at 5.382 mmt, down 20.3% from last year and above the 4.106 to 4.785 mmt pre-report estimates reported by Commodity News Service. This is viewed as a puzzling number, given that December 31 stocks deducted from AAFC's total barley supplies for 2014/15 would suggest disappearance of 3.679 mmt, which is 630,700 mt or 14.6% below the five-year average. While this may be a breath of fresh air for feed users, we will be looking for potential balance sheet adjustments in the future.

Flax stocks as of December 31 slightly exceeded expectations at 608,000 metric tonnes, 24.1% above year-ago levels and 14.8% above the five-year average. As well, oat inventory as of December 31 was reported at 2.485 mmt, 12.7% below the year-ago inventory and roughly equal to the five-year average for this time. Disappearance through the first five months of the crop year is on par with the five-year average, while the five-year average demand seen in the January through July period would infer an oat carryout of 808,000 mt, below the current 900,000 mt estimate shown by AAFC.

Canada's corn stocks as of December 31 is reported at 9.671 mmt, down 16.6% from year-ago levels. This would be the smallest December 31 inventory since December 2011. Soybean stocks as of December 31 were reported at 3.477 mmt, 29.4% higher than year-ago volumes and a record inventory for this point in time.

The tightest stocks situation shown in today's report is reserved for the dry pea and lentil crops. December 31 stocks are the tightest seen in years and point to a rationing of supplies necessary through the balance of the August 1 through July 31 crop year.

Lentil stocks were reported at 755,000 mt, down 47.9% from last year and below the 10-year average of 1.03 mmt as shown on the attached graph, the tightest stocks in six years. The export pace of lentils has been well ahead of the five-year average disappearance so far this crop year, while the previous five-year average disappearance for the January through July period of 937,800 mt would exceed the available supply. This should make for an interesting situation for producers holding product through the balance of the crop year.

Pea stocks were reported at 1.556 mmt as of December 31, 33.4% below year-ago stocks and also below the 10-year average stocks of 2.08 mmt, while the tightest stocks in seven years. As with lentils, the export pace of peas is well ahead of the five-year average, while the five-year average demand in the January through July period of 1.8 mmt once again exceeds total supplies and will lead to rationing through the balance of the crop year.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(CZ)

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