Canada Markets

Friday's USDA report opened the door to what may be an even more challenging global market for North American suppliers. Global production of wheat was increased 5.060 million metric tons to 731.61 mmt, the third consecutive year of a record global production, while ending stocks for 2015/16 increased a similar 5.090 mmt to reach a record 226.560 mmt. Stocks as a percent of global usage are calculated at 31.6% given today's data, the highest seen since the 2001/02 crop year.

The USDA also notes global wheat supplies increasing 6.7 mmt from last month, noting Statistics Canada's recent report which saw prior-year adjustments boosting previous carryout levels.

Heightened competition is indicated in the report, with gains seen in the EU and Ukraine given projections for higher production, while the USDA trimmed the United States' export potential for the second straight month to 900 million bushels, or approximately 24.5 mmt. In August, the USDA trimmed its estimate for all-wheat exports by 25 mb (680,400 metric tons), while trimming its estimate by the same amount this month. This current estimate would still result in a 5.4% increase in U.S. wheat exports over 2014/15.

Canada's all-wheat exports were left unchanged by the USDA this month at 18 mmt, a 25.2% drop from Statistics Canada's estimated 2014/15 exports of 24.069 mmt.

Agriculture and Agri-Food Canada's July estimates suggest that 2015/16 all-wheat exports would reach 21 mmt. The attached chart indicates where we are at in relation to that target by plotting weekly Canadian Grain Commission all-wheat exports (licensed exports of wheat and durum), which excludes the impact of both flour and unlicensed exports which are included in the AAFC target.

While weekly exports have only reached the weekly volume needed to stay on track to reach the 21 mmt target in two of the five weeks, as seen by the green bars exceeding the height of the blue line in week 1 and week 3, cumulative exports to date (red line) are on track to reach the annual target, as seen by its relationship with the upward-sloping black line.

Cumulative exports of wheat as of Sept. 6 are reported at 1.9064 mmt, down 14.5% from the same week last year, while cumulative exports of durum are reported at 110,700 mt, down 83.3% from last year.

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

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(ES)

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