Canada Markets

The Statistics Canada September estimates of production of principal field crops generated little focus this morning, with production estimates for row crops remaining similar to July estimates while most western crops were revised higher as expected. Statistics Canada set the stage for increases in production on Sept. 17 with its first-ever model-based production estimates. Those were consistent with provincial yield estimates which reported late-season improvements over significant areas of the Prairies.

Canada's all-wheat production was estimated at 26.1 mmt, down 11.4% from last year and closer to the upper end of the range of pre-report estimates of 24.7 to 26.5 million metric tons. This would be the lowest production level since 2011. Total 2015/16 supplies will be 17% below 2014/15 and 7.7% below the five-year average. Without any upward revisions to demand, ending stocks should tighten for the second straight year. As of week 8, licensed wheat exports are well ahead of the pace needed to reach current export targets while cumulative durum exports are well-below the cumulative volume needed to reach the annual target.

Canada's durum production was estimated at 4.744 mmt this morning, near the mid-point of the range of pre-report estimates from 4.5 mmt to 5.1 mmt. This would be a three-year low for durum production on the prairies. Total supplies for 2015/16 are indicated to be 18% below last year and 11.4% below the five-year average. Given current AAFC supply and demand estimates, 2015/16 carryout will remain steady and close to 1 mmt, around the lowest levels seen since 2007/2008. As mentioned, cumulative exports of durum remain close to 355,000 mt behind the cumulative pace needed to reach current export projections.

Canada's canola production estimate of 14.3 mmt was expected and near the mid-point of the range of pre-report trade estimates from 13.5 mmt to 15.2 mmt. This estimate is also equal to the recent model-based estimate. This would be the smallest crop in three years. Total supplies available for 2015/16 are estimated to be 14.7% below last year while only 3.4% below the five-year average. Demand may be the key to avoiding a build in stocks this year, although week 8 exports are running ahead of the pace needed to reach the current AAFC export estimate while Canada's domestic canola crush is only marginally below the pace needed to meet the current 2015/16 target after favorable crush data was reported for the week ending September 30.

Perhaps the only surprise today was seen in barley, with today's estimate at 7.6 mmt, above the upper-end of pre-report expectations with the crop expected to range from 6.9 mmt to 7.4 mmt. This is close to a 500,000 mt recovery from last year's record-low production, with higher seeded and harvested acres behind the move. Total supplies of barley are estimated to be 4% below last year and 10.4% below the five-year average, while current supply and demand estimates from AAFC would suggest only a slight draw-down in stocks by the end of this crop year.

Canada's oat production was estimated at 3.292 mmt this morning, within the 3 to 3.4 mmt range of pre-report estimates and similar to the July estimate. This volume is 10.5% above last year's production, again, based on higher seeded and harvested acres while yields are estimated to fall from last year. Total supplies available for 2015/16 are estimated to be just 1.9% below last crop year and 1.2% higher than the five-year average. Current supply and demand estimates suggest that oat stocks will rebound during the 2015/16 crop year to levels above the five-year average.

Canada's dry pea production was estimated at 3.2 mmt, the upper-end of pre-report estimates with a range of 2.8 mmt to 3.2 mmt expected. This would indicate the smallest crop in four years. Total supplies for 2015/16, based on current carryout and production estimates, are estimated to be 14% below last year and 5.5% below the five-year average. Given current estimates, dry pea stocks should tighten from 2014/15 levels. Despite the smaller crop and reduced supplies, week 8 statistics show producer deliveries (into licensed facilities only) to be ahead of last year while licensed exports are also ahead of last year's pace.

Lentil production was reported at 2.162 mmt, slightly higher than the July estimates and slightly higher than last year's production. Total supplies available for 2015/16 are 9.3% below last year and 1.7% above the five-year average. Given current AAFC estimates, ending stocks could come in close to levels reported for 2014/15.

Statistics Canada lowered its outlook for Canada's corn production slightly from the July report, with an estimated production of 12.2 mmt, slightly lower than the 12.3 mmt estimate release in July. This is a 6% rebound from 2014 production, with production rising in both Ontario and Quebec and falling in Manitoba with reduced acreage and yields. Total supplies will be reduced from 2014/15 although exports are expected to grow while ending stocks are expected to fall for the second consecutive year to the lowest levels since the 2001 and 2002 carryouts.

Soybean production was reported at 5.928 mmt, slightly higher than the July estimate and the first year/year decline in production in 8 years. This lower production comes as a result of lower acreage and yield in Ontario along with an increase in acreage and yield in Manitoba. Total supplies will be reduced from last year although remains above the five-year average.

Of interest in this report is the relationship between today's survey- based data as compared to September's model-based analysis. The September release was the first of its kind, which included estimates based on a combination of satellite data, the July surveys and agro-climatic factors. While today's canola, soybean and durum estimates were similar to the model-based estimates, today's corn estimate was 500,000 mt lower than the model-based estimate, while today's spring wheat estimate was 600,000 mt higher, today's barley estimate was 600,000 mt higher and today's dry pea estimate was 335,000 mt higher.

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

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