Canada Markets

Statistics Canada released their estimates of March 31 grain stocks in Wednesday's Stocks of Principal Field Crops report. This comes at a time when producers are more apt to be watching the skies and focusing on seeding, although this report could be of more interest to the industry than normal due to a forecast for fewer canola acres going into the ground in 2015 while pulse crop supplies such as peas and lentils are dwindling due to an aggressive export program this crop year.

Stocks of Canada's all-wheat were reported at 16.738 million metric tons, down 25.1% from March 31, 2014. This volume is below the pre-report trade estimate of 17.2 mmt to 18.7 mmt. This remains the second-highest March 31 all-wheat stocks in the past five years and is nearly identical to the five-year average stocks on the same day.

Stocks of wheat (excluding durum) were estimated at 14.420 mmt, down 21.3% from last year while above the five-year average of 13.257 mmt as of March 31. Good movement through the pipeline saw farm stocks fall 26.9% since March 31, 2014, while commercial stocks rose just 2%. Farm stocks are 1 mmt higher than the five-year average. The five-year average disappearance for wheat (excluding durum) is 7.8 mmt in the April through July period, a pace which would suggest ending stocks fall in the 6.6 mmt range, above the current estimate of 5.2 mmt released by Agriculture and Agri-Food Canada in their April report. At the same time, the 2014 disappearance in the same period is calculated at 9.9 mmt, a pace that could tighten ending stocks to levels below current estimates.

Durum stocks were estimated at 2.318 mmt as of March 31, down 42.2% from last year. This is the lowest March 31 stocks seen since 2008, while significantly below the five-year average of 3.5 mmt. Estimated farm stocks have fallen 52% from March 31, 2014, while commercial stocks have fallen just 4% in the same period. A sign of what may lie ahead, the average disappearance over the past five years in the April through July period is calculated at 1.8 mmt, suggesting that an average pace of movement could see ending stocks in the 500,000 metric tonne range, well below the current AAFC estimate of 1 mmt and would result in the lowest carryout in Statistics Canada data back to 1996/97. The five-year average carryout is 1.735 mmt. This may not become reality given a potential for slowing of export movement with good crops coming in Europe and North Africa while North American buyers may wait patiently for higher-quality new-crop supplies.

Canola stocks as of March 31 were reported at 7.039 mmt, down 18.9% from year-ago data and also below the range of pre-report trade estimates ranging from 7.1 mmt to 7.8 mmt as released by Commodity News Service. This volume remains above the 6.4 mmt five-year average as of March 31, while both exports and domestic crush remain above year-ago levels. The average disappearance during the April through July period over the past five years was 4.7 mmt, a pace which could lead to a 2014/15 carryout at 2.3 mmt, virtually unchanged from last year and well above the 1.450 mmt estimate released by AAFC. At the same time, the April through July disappearance in 2014 was 6.2 mmt, which could lead to a sub-1-million-metric-ton carryout and tighter than seen in current estimates.

Statistics Canada found 3.376 mmt of barley stocks as of March 31, down 23.4% from 2014/15. This is below the five-year average for March 31 stocks at 3.9 mmt but matched pre-report expectations. Market watchers will look to this data for impacts of feed demand on barley stocks, although this data would suggest the decline in cattle numbers continuing to impact feed consumption. Statistics Canada data implies total disappearance of 2 mmt between December and March, which is below last year at 2.4 mmt and the five-year average of 2.3 mmt. Year/year exports have risen year to date, suggesting a reduction in feed usage. The five-year average disappearance is calculated at 2.3 mmt over the April through July period while last year's disappearance totaled 2.4 mmt during the same period, implying the potential for ending stocks to be close to 1 mmt, higher than the current 650,000 mt ending stocks estimate released by AAFC.

Oat stocks were reported at 1.588 mmt, down 27.2% from last year and below the five-year average March 31 stocks at 1.821 mmt. Commercial stocks have fallen 7.1% in the last year while farm stocks are reported to have fallen 29%, signaling a drastic improvement in year/year movement through the pipeline. The April through July disappearance is calculated at 1.1 mmt in 2014 and close to a 1 mmt average over the past five years. This pace would suggest ending stocks nearing 600,000 mt, which is slightly lower than the current 725,000 mt carryout estimated by AAFC.

Record soybean production in 2014 has led to record stocks as of 2.063 mmt as of March 31, well above the five-year average for March 31 stocks of 1.6 mmt. Stocks on farm increased 12%, with increased farm inventory noted in Quebec and Ontario, while prairie growers in Manitoba and Saskatchewan saw inventories drop year/year. Commercial stocks increased by close to 122% to the highest levels held by commercial interests at this time. April through August disappearance over the past five years has averaged roughly 1.3 mmt, which would imply a 763,000 mt ending stocks figure, which is above the recent AAFC estimate of 275,000 mt.

The corn stocks figure was reported at 6.467 mmt, down 18.9%, although equal to the five-year average for March 31. Farm stocks and commercial stocks fell by the same percentage, while the largest drop in farm stocks was experienced in Ontario with a year/year drop of 400,000 mt while stocks in Manitoba fell by 325,000 mt or 54% to 275,000 mt, a three-year low. The five-year average disappearance in the April through August period is calculated at 4.9 mmt, which would lead to a carryout of roughly 1.5 mmt, which is equal to the current AAFC estimate released in April.

The tightest stocks were seen in the pulse crop data released Wednesday. Lentil stocks were released at 434,000 mt, down 53.6% from last year and the lowest since March 2010. The five-year average for this point in time is 995,000 mt. While year/year stocks in commercial hands increased 13,000 mt, or 11%, stocks in farmers' hands are reported to have fallen 63% to 301,000 mt and the lowest level of farm stocks seen since 2008. The five-year average disappearance in the April through July period is calculated at 557,000 mt, while last year's disappearance is calculated at 771,000 mt, both above the level of March 31 stocks. One comment from the industry suggests that the industry is already running on fumes.

Dry pea stocks were reported at 1 mmt, down 34.3% from March 2014, the lowest level of inventory reported since March 2008. The five-year average inventory is calculated at 1.5 mmt. Commercial stocks are reported at 309,000 mt, up 78% from March 2014, while stocks on farm are estimated at 695,000 mt, down 49% from March 2014 and the lowest farm inventory seen since March 2008. The average April-through-July disappearance is roughly 1.1 mmt, while the 2014 disappearance is calculated at 1.2 mmt. Once again, this volume exceeds the reported available stocks as of March 31.

The attached chart shows the trend in the March 31 stocks for both peas (blue bars) and lentils (green bars) as measured against the left-hand primary vertical axis. Also added is the March 31 stocks as a percentage of total estimated supplies for peas (red line) and lentils (black line), as measured against the left-hand vertical axis. March 31 stocks of dry peas, at 1.004 mmt, is calculated at 26.6% of total estimated supplies available for the crop year, while the March 31 stocks of lentils, at 434,000 mt, and is calculated at 20.1% of total estimated supplies. Both are at their lowest points in this 16-year period and speak to the rapid disappearance of supplies this crop year.

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

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