Canada Markets

AAFC's October Supply and Demand Estimates

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart shows the year-over-year forecast change in grain supplies (blue bars), exports (brown bars) and ending stocks (grey bars) based on the October Agriculture and Agri-Food Canada estimates. (DTN graphic by Nick Scalise)

The October supply and demand tables found in the October Canada: Outlook for Principal Field Crops includes updated yield data reported in the September 19 Model-Based Yield data that saw estimated yields for most principal field crops increase.

While production of all principal field crop is estimated 4.754 million metric tons higher than seen in the September report, to 88.550 mmt, total estimated production is estimated down 4.8% overall from 2016/17. Total 2017/18 crop year supplies are revised higher from last month, to 104.623 mmt, down 3% from the previous crop year with a higher 2016/17 ending stocks estimate being offset by lower 2017 production. This is comprised of a 1.872 mmt (1.9%) drop in total grain and oilseed supplies, while supplies of pulse and special crops were reduced by 1.467 mmt (15.5%).

The attached chart shows a number of selected, larger principal field crops monitored by the AAFC, showing the largest year-over-year decline in supplies estimated for durum, arising from a 16% reduction in seeded acres combined with an estimated 36.3% reduction in estimated yield. This leads to a 30.4%, or 2.7 mmt, reduction in total crop year supplies. One major offset to this drop is seen in the estimates for soybeans, with an estimated 31.6% increase in seeded acres combined with an estimated 4.4% drop in yield expected to result in a 1.517 mmt, or 17%, increase in 2017/18 crop year supplies.

Exports of all principal field crops are expected to increase by 1.8%, or 901,000 metric tons, from last crop year to 50.238 mmt. Higher quality cereal crops have led to an increase of 300,000 mt in wheat exports this month, to 16.3 mmt, which is an estimated 677,000 mt higher than achieved in 2016/17. Durum exports were increased by 400,000 mt, to 4.6 mmt, despite the overall drop in supplies, or 66,000 mt higher than achieved in 2016/17. It's interesting to note the responsiveness in soybean exports to the level of available supplies. As seen on the attached chart, an increase of supplies totaling 1.5 mmt is forecast to lead to a corresponding increase in exports. This comes at a time when DTN reports that China is currently accepting all of the soybeans that both the U.S. and Brazil can achieve.

Ending stocks for Canada's principal field crops is expected to fall an estimated 2.184 mmt, or 14.8%, to 12.538 mmt. As indicated by the grey bars on the attached chart, the largest swings are expected for wheat (973,000 mt) and durum (1.063 mmt), while barley, not shown, is expected to see ending stocks fall by 722,000 mt.

Of the major crops, both canola and soybeans show the potential for the tightest stocks relative to annual demand. At an estimated 1 mmt, canola stocks are estimated to fall to just 5% of annual use, which would be down for the fourth consecutive crop year and the tightest level seen since the 2012/13 crop year. Soybean ending stocks are forecast at 5.7% of annual demand, which would be a three-year high. At the same time, there is a noted tendency for the USDA to understate demand, while AAFC could face a similar challenge.

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

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