Canada Markets

Agriculture and Agri-Food Canada (AAFC) released updated supply and demand tables on Thursday, the first update since July and based on Statistics Canada's latest production and stocks estimates.

Prior-year adjustments have resulted in a 2014/15 Canadian carryout of total grains and oilseeds of 13.173 million metric tons, up from the July estimate of 11.168 mmt, which helps off-set the impact of this year's lower production levels. 2015/16 supplies of all grains and oilseeds are expected to be .9% lower than estimated in July and 13.3% below 2014/15 volumes. This gap should be expected to narrow with October data; there is an expectation that Statistics Canada will increase yield estimates, given updated producer surveys. Those include higher-than-expected yields, along with findings on StatsCan's recent model-based principal field crop estimates.

Ending stocks of total grains and oilseeds are estimated at 8.895 mmt, well-above the 7.465 mmt estimated in July, while still 32.5% below 2014/15 levels. This level of stocks is still the lowest level of stocks for grains and oilseeds seen in StatsCan data going back to 1980, possibly a record low, while only the third time that stocks of grains and oilseeds have fallen below 10 mmt. 2012/13 stocks ended with a similar level of 8.978 mmt.

Prior-year adjustments also boosted ending stocks of total pulse and special crops, leaving the 2014/15 carryout at 999,000 mt, up from the July estimate of 365,000 mt. Production prospects for the current crop year have also been scaled back, with total supplies increased from the July estimates to 6.826 mmt, down 14.8% from 2014/15. Ending stocks for all pulses and special crops are estimated at 565,000 mt, up 61% from the July estimate, but down 43.4% from 2014/15.

Canada's wheat ending stocks for 2013/14 and 2014/15 were increased in this report, given prior-year adjustments, while boosting beginning stocks for the current crop year. Production for 2015/16 has been reduced from July estimates, while 2015/16 supplies are reported to be 20% below 2014/15 levels.

Canada's export potential for wheat for the current crop year has been slashed by 1.5 mmt since July to 15 mmt, also down 20% or 3.7 mmt from last year. Ending stocks are reported at 3.5 mmt, down 43% from 2014/15, roughly equal to the 2007/08 ending stocks estimates. Total wheat exports as of Week 7 are 13.7% behind year-ago volumes, although are well-ahead of the cumulative pace needed to reach the annual export target of 15 mmt. At the same time, Week 7 exports were the lowest weekly volume shipped since the beginning of the crop year and may be an indication of what's to come. As seen on the attached chart, cumulative exports (red line) remain higher than the cumulative volume needed to reach the 15 mmt target (black line) although Week 7 exports were the lowest volume seen this crop year.

Despite a higher seeded and harvested acreage of durum in 2015, reduced durum yields are expected to lead to lower production while total supplies are expected to fall 22% from 2014/15 to 5.460 mmt, down 745,000 mt from the July estimate. Canada's export potential is cut by 400,000 mt since July to 4.1 mmt, down 23.6% from 2014/15. Ending stocks are expected to fall 282,000 mt to 700,000 mt, which would be the lowest estimated stocks since 1985/86. At the same time, weekly exports of durum have been reported well-below the volume needed during each of the past seven weeks of the crop year, while cumulative exports are 321,200 metric tons behind the steady pace needed to achieve the reduced export target. Demand may be a limiting factor in 2015/16.

The smaller canola crop forecast for 2015/16, combined with upward revisions to prior year production, have resulted in an increase in canola supplies since the July estimates to 15.765 mmt, although that is down 19% from last year. It's important to note that Statistics Canada's recent model-based production estimates, based on satellite data, producer surveys and agro-climatic data opened the door to the possibility of a 14.4 mmt crop. That's 1.1 mmt higher than utilized in AAFC's tables, which may suggest a higher yield estimate to follow in StatsCan's Oct 2 report. The current data suggests an equal splitting of supplies, with 7.1 mmt exported and 7.0 mmt crushed, resulting in a 1.5 mmt carryout, 1 mmt higher than expected in July.

As of week 7, domestic crush remains behind the cumulative pace needed to reach this lower crush target, despite higher crush capacity on the Prairies. Exports however, remain 13.2% ahead of the year-ago pace (licensed exports only) and also ahead of the cumulative pace needed to reach this lower target. The Vancouver cash basis did widen $4/mt today to $30 over the November and may lead to slower movement given the potential for waning demand this crop year.

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

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