Agriculture and Agri-Food Canada released its updated supply and demand tables for grains, oilseeds, pulses and special crops on Monday, indicating a significant tightening of Canada's grain stocks in the year ahead while also suggesting that further revisions may be necessary should the current drought continue. At a glance, I would suggest that further cuts are all but guaranteed. The released report updates acreage estimates given Statistics Canada's Principal Field crop areas report released June 30.
Page 1 of the report estimated total 2015 production of Canada's principal field crops will reach 76.904 million metric tons, just 3.6% below last year. This is a combination of a 3.8% year-over-year drop in total grains and oilseeds production along with a 1.7% drop in pulse and special crop production. Combined with current demand estimates, ending stocks of all the principal field crops are expected to fall 32.2% to 7.815 mmt, the lowest level in Statistics Canada data going back to 1980. Here's a quick look at a few crops:
Canada's wheat (except durum) production for 2015/16 was lowered from last month's expected slight decline from 2014/15 to a 2.2 mmt drop to 21.9 mmt this month. This estimate involves a 5.7% reduction in 2014 yield to 44.6 bushels per acre, which would be higher than the 10-year average. It will be interesting to see the final estimates of the CWB crop tour of the Prairies, with one Producer.com headline indicating "spring wheat yields puny in dry Alberta, near-records in Manitoba".
AAFC's durum production was estimated at 5.2 mmt, down 500,000 metric tons from last month, but slightly higher than the 2014 production on the combination of a lower yield along with increased acres. Yield was pegged at 33.9 bpa, 17% below last year and below the 10-year average. Saskatchewan Agriculture recently rated the crop at only 26% Good to Excellent, with roughly one-third of the crop rated as poor to very poor. Alberta's provincial rating was reported at 37.7% Good to Excellent. Reports suggest that the CWB has pegged the crop at 4 mmt, 1.2 mmt below the current AAFC estimate, suggesting that stocks could tighten significantly from the current 800,000 mt carryout expected by AAFC. Ending stocks could easily tighten further to test the 757,000 mt carried out of the 1997/98 crop year to be one of the tightest on record.
AAFC dropped its 2015 canola production estimate by 625,000 mt to 14.3 mmt, just 8% below 2014 production. Yields are forecast to average 31.9 bpa, below last year and the 10-year average, but surprisingly high given that the canola crop is one of the hardest hit on the western Prairies drought. Today the CWB estimated production at 12.18 mmt significantly lower and most troublesome given demand which has been over 16 mmt in two of the last three years. AAFC sees exporters taking it on the chin, reducing exports by 17% to 7.6 mmt while crushers will crush 7.2 mmt, the same volume as the current 2014/15 estimate. According to AAFC, ending stocks will fall to 500,000 mt, among the tightest on record, although note that the CWB estimate suggests production is 2 mmt lower than that of AAFC which could spell for excitement in the canola market.
Despite a rebound in barley acres in 2015, AAFC has estimated barley yields at 57 bpa, down 7.8% from last year and slightly below the 10-year average. Total production is estimated at 6.9 mmt, down just 3% from last year and a record low. Both exports and domestic use are expected to fall slightly, leaving ending stocks down 50% to an extremely tight 500,000 mt, likely the tightest on record.
What could very well tighten this situation further is the feeding of cattle this summer which normally would be on grass, which will tighten old-crop stocks more than expected. As well, some crops may be grazed or cut for green feed which will further reduce harvested acres. In addition, as with other crops, AAFC yields could prove to be higher than actually achieved which would suggest that the upcoming year will also be very tight for barley.
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