With Statistics Canada set to release July 31 stocks for Canadian grains at 7:30 AM CST on Sept. 3, here is a look at where ending stocks would lie based on historical demand. The attached chart shows a projection for ending stocks based on subtracting the five-year average April through July demand or disappearance from the March 31 2015 stocks reported by Statistics Canada (blue bars), while the red bars show the same calculation while focusing on the April-through-July demand in 2014 only. The green bars represent the most recent (July) estimates from Agriculture and Agri-Food Canada.
Based on historical demand data, Canada's all-wheat stocks would be reported at 7.166 million metric tons based on the average disappearance over the past five years in the April-through-July period. Should disappearance match the same period in 2014, ending stocks could be reported as low as 4.743 mmt, down 54% from July 2014 and would be the lowest level in seven years. The current AAFC estimate is suggesting a 6.7 mmt all-wheat carryout.
July 31 stocks of durum would be reported at 525,400 mt based on the five-year average demand or disappearance between the March 31 stocks report and the stocks reported as of July 31. This would be the smallest year-end stocks reported since July 1985. Given 2014 April-through-July demand, ending stocks could fall below 100,000 mt or the lowest on record. AAFC's current carryout estimate is 1 mmt.
The five-year average demand for canola would lead to a 2014/15 carryout of 2.369 mmt, down very little from 2013/14, although current disappearance is well above the five-year average. Based on the March 31 stocks and 2014 April through July demand, carryout could reach 800,000 mt, similar to the 950,000 mt estimated by AAFC. This would result in a near-retracement to the 588,000 mt carried out of 2012/13 and a significant drop from the 2.438 mmt carried out of the 2013/14 crop year.
Two crops that are bound to show minimal stocks as of July 31 (not shown) are dry peas and lentils. Given tight March 31 stocks for both crops, deducting the average April-through-July disappearance over the past five years from the March 31 stocks reported for 2015 would lead to negative stocks. The same can be said for deduction the 2014 demand for the same period from the 2015 March 31 stocks for either crop. Tight ending stocks for these two crops will affect available supplies for the following crop year and will be supportive for price.
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