Thursday's Statistics Canada report provided a first look at 2017 production, the first of two back-to-back reports which will shed some light on potential 2017/18 supplies, with July 31 stocks estimates to be released on Sept. 6. This report will undoubtedly lead to further discussion as combines dig deeper into the fall harvest. The survey period of July 19 to Aug. 1 has led to concerns that this was just too early to evaluate the crop's potential. Then there is the tendency for this report to understate production for many crops, as we have noted over the years in this space.
Canada's all-wheat production was estimated at 25.5 million metric tons, down 19.5% from 2016, 16.8% below the five-year average and the lowest all-wheat production in six years. This was within the range of Commodity News Service pre-report estimates, which ranged from 22.8 mmt to 27.8 mmt.
Bundled within this number is the durum estimate, which at 3.898 mmt was down 49.8% from 2016 and 33.9% below the five-year average. This was below the range of pre-report estimates at 4.2 mmt to 5.3 mmt and would be the smallest crop produced in seven years. Seeded acres on the Prairies are estimated 15.9% lower than 2016, while yield in Saskatchewan is expected to fall 44.5% to 26.8 bushels per acre, while Alberta yield is expected to fall by 34.8% to 33 bpa. Alberta Agriculture's last yield estimate was 35.9 bpa as of Aug. 8, although has shown the crop condition rating to slip lower since. It is interesting to note that with an estimated 32% of the Saskatchewan durum crop harvested, Saskatchewan Agriculture has estimated durum yield at 30 bpa, as compared to Statistics Canada's 26.8 bpa estimate.
A smaller-than-expected durum crop points to a larger-than-expected wheat crop (excluding durum). Total spring wheat production is estimated at 18.889 mmt, down 7.7% from 2016 and 12.4% below the five-year average. This level implies production at the higher-end of the range of pre-report estimates. Acres seeded to spring wheat across the country are estimated to have increased 2.5% to 15.8 million acres, which includes a year-over-year decrease in Manitoba offset by increases in both Saskatchewan and Alberta. Yields however, are expected lower across all three provinces, with Manitoba's yield estimated at 49.4 bpa, down 5%, while Saskatchewan's provincial yield is estimated at 37.5 bpa, down 18.7% and Alberta's yield is estimated at 50 bpa which is 16% lower than 2016. The market did not take kindly to this morning's report, with the MGEX December contract down 15 1/4 cents and ending below support. Hard red spring wheat production is estimated at just 3.5% below 2016 at 16.087 mmt, down 10.3% from the five-year average, giving buyers of high protein wheat added assurance.
As expected, today's report included an upward revision in last year's canola production, which was boosted 1.2 mmt from 18.4 mmt to 19.6 mmt. This helps explain the tight stocks reported on paper while basis and spreads weakened. Moving forward to 2017, production was estimated at 18.203 mmt, which falls in the lower end of the range of Commodity News Service estimates ranging from 18 mmt to 19.5 mmt. This volume is 7.1% below the upwardly revised 2016 production total, while is 4.8% higher than the five-year average. This is despite the record acreage of 22.8 mmt. The national yield is expected to fall by 7.9 bpa or 18.3% to 35.2 bpa, which includes a year-over-year drop of .2% in Manitoba, 23.8% in Saskatchewan and 16.6% in Alberta. This summer's heat proved too much for crops grown in the western Prairies.
The potential for the canola crop will be one of the most debated going forward. With a significant adjustment to 2016 production made, some Twitter posts indicated expectations for a similar move, if not greater, to take place in 2017. Previous work in this space has shown that over the past five years, there is an average 16% increase in production noted between the July estimates and the final number reported in December. Taking into account today's upward revision, this number becomes even greater. Futures spreads have mostly weakened over the week, a bearish response on the part of traders.
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Oat production is estimated at 3.685 mmt, 15.4% higher that estimated for 2016 and 12.8% higher than the five-year average. This would place 2017 production as the highest in four years, while slightly higher than the higher-end of pre-report estimates ranging from 3.1 mmt to 3.6 mmt. Today's report also included a modest upward revision to 2016 production of 47,700 mt. It is interesting to note that Saskatchewan Agriculture's crop report as of Aug. 28 estimates yield at 76 bpa as compared to the 89 bpa reported by Statistics Canada. The report was viewed as bearish by the market, with the December oat contract closing down 6 1/4 cents, a further push below chart support.
Barley production is estimated at 7.212 mmt, down 17.9% from 2016 and 14.9% below the five-year average. This would be the lowest production in three years and near the mid-point of pre-report trade estimates, which ranged from 6.7 mmt to 7.75 mmt.
Both pea and lentil production is estimated sharply lower. Dry pea production is estimated at 3.793 mmt, down 21.6% form 2016 and 1% below the five-year average while near the middle of the range of pre-report estimates of 3.4 to 4 mmt. While seeded acres on the Prairies fell by only 3.4%, or 146,000 acres, to 4.093 million acres, the average yield in Saskatchewan is estimated to fall by 24% to 30.3 bpa, while the average yield in Alberta is expected to fall by 15% to 30.1 bpa. Saskatchewan Agriculture estimates the provincial yield at 32 bpa, slightly higher than Statistics Canada.
Lentil production is estimated to fall by 29.5% to 2.291 mmt, which is also 1% below the five-year average. Seeded acres across the west are estimated at 4.405 million acres, down 24.8% from 2016. The sharp drop in production is also tied to yield losses, with the total yield expected to fall by 6.7% to 1,164 lbs/ac. It is interesting to note that Saskatchewan is estimated to have seeded 89% of the total acres, while Saskatchewan Agriculture has estimated provincial yield at 1,293 lbs/acre versus Statistics Canada's 1,166 lb/acre Saskatchewan yield.
The country's corn production is estimated at 13.645 mmt, up 3.4% from 2016, up 4.2% from the five-year average and would be the highest reported production in four years. Canada's seeded acres are estimated to increase by 7.6%, to 3.576 million acres, while the country's yield is expected at 153.4 bpa, down 5.3 bpa. Major producing provinces all seeded more acres to corn in 2017, while a 3.1 bpa increase in Ontario's yield to an estimated 161.6 bpa is partially offset by an 11% drop in Quebec yield and 10.5% drop in Manitoba. A private two-week tour of Ontario released results today, resulting in an average yield of 163.2 bpa, which compares to the 161.6 bpa estimate from Statistics Canada.
Canada's soybean production is estimated to reach a record 7.743 mmt, up a significant 19.8% increase from 2016 and 32% higher than the previous five-year average. The country's seeded acres grew by 1.8 million acres or 33%, with the most rapid growth on a percentage basis seen in Manitoba, up 40%, and Saskatchewan, up 254%. Increased acres offset an estimated 4.8 bpa yield loss seen across the country, with yields estimated below 2016 levels across all provinces. The two-week tour of Ontario resulted in an average yield estimate of 45.7 bpa as compared to Statistics Canada's 44.6 bpa estimate for the province.
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