Ahead of Statistics Canada's production of field crops report based on November estimates, today's study is yet another reminder that patience is often required prior to chiseling crop production estimates into stone.
Past studies have pointed to the likelihood of crop production revisions -- often upward -- between the July estimates, or the September model-based estimates, and the final estimates released in December. Today's study focuses on revisions made at some future point following the release of the November estimates. As stated on the December 2016 report, all data is subject to potential revisions for a two-year period.
As seen on the attached chart, the elephant in the room when it comes to revisions is the canola crop data. Between 2012/13 and 2016/17, the canola crop production estimate has been revised higher for each year following the release of the November estimates, ranging from a low of 558,500 metric tons for 2012/13 and as high as 1.145 million metric tons for 2014/15. The five-year average is 785,000 mt, as indicated by the blue bar on the attached chart. The brown line with markers indicates this as an average percent change of 4.2%, as measured against the secondary vertical axis.
While the average canola revision is by far the largest on a volume basis, on a percent change basis the pulse crops of dry peas and lentils show the largest change of the crops selected. Over the five years in question, dry pea production was revised higher in three of the five years while lentil production was revised higher in four of the five years. While the five-year average increase in production volume is only 197,540 mt for peas and 152,620 mt for lentils, this represents a higher average percent change of 6.3% and 8%, respectively.
While history may not accurately predict future events, one example of what is to come may be seen in the canola market. While the current price is nearing a test of last week's 11-week highs, the nearby Jan/March spread has weakened $1.10/mt so far this week suggesting a growing bearish response on the part of commercial traders.
DTN 360 Poll
What do you think that Statistics Canada will report with respect to the overall size of the Canadian crop in its final estimates released in December? You can weigh in with your thoughts on this week's poll that is found at the lower right of the Canadian Home Page.
Cliff Jamieson can be reached at email@example.com
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