Canada Markets

A Look at AAFC's November 2017/18 Ending Stocks Estimates

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart looks at the percent change in forecast ending stocks for selected crops given Agriculture and Agri-Food Canada's November supply and demand estimates from 2016/17 to 2017/18. Brown bars represent a year-over-year contraction in stocks, while blue bars represent a year-over-year increase. The largest change this month was due to an increase in forecast dry pea stocks given a decline in expected exports. (DTN graphic by Nick Scalise)

Agriculture and Agri-Food Canada's November Canada: Outlook for Principal Field Crops supply and demand tables saw an overall 270,000-metric ton drop in exports of all principal field crop exports since October estimates were reported. This has contributed to an overall increase in carryout stocks of all principal field crops of 412,000 mt since last month, to 12.950 million metric tons, down 12% from the estimated stocks for 2016/17.

These changes are due to an upward revision for exports of grains and oilseeds and a drop in estimated ending stocks, while exports of pulse and special crops is expected to fall, given a sharp drop in expected dry pea exports which is expected to lead to a climb in ending stocks.

As seen on the attached chart, current Agriculture an Agri-Food Canada estimates for ending stocks are expected to fall year-over-year for durum, wheat, barley and canola (brown bars), while the blue bars points to the selected crops which are expected to see ending stocks increase over the upcoming crop year. On a percentage basis, dry pea ending stocks are expected to climb 216.7%, from 300,000 mt in 2016/17 to an estimated 950,000 mt in 2017/18, an increase of 450,000 mt since the October estimate. This would reflect the largest ending stocks on record based on expected lower export potential tied to India's recent decision to impose a 50% import tariff.

Of course, this data lies just ahead of Statistics Canada's fresh look at production prospects, while taking on the impossible task of estimating demand.

Over the past five crop years, licensed exports of durum reported by the CGC for week 15 have accounted for an average of 27.1% of total crop year exports. Cumulative licensed exports as of week 15, or the week ending Nov. 12, exports total 1.061 mmt, while the average pace of movement over the past five years would project to total crop year exports of 3.9 mmt, which is well below the current 4.6 mmt export target.

Over the past five years, licensed wheat exports (excluding durum) represent an average of 26.9% of total crop year exports, as of week 15. This would project to crop year exports of 16.448 mmt, given the 4.420 mmt shipped as of week 15, which is higher than the current 16.3 mmt estimate released by AAFC.

Over the past five years, licensed exports of canola have averaged 27.3% of total crop year exports, as of week 15, which projects to total crop year exports of approximately 11 mmt, given the 2.992 mmt already shipped in 2017/18, equal to the current AAFC estimate. Over the past four years, an average of 32.7% of total crop year exports of soybeans have been shipped as of week 15. This projects to an estimated 4.4 mmt to be shipped this crop year, given the 1.424 mmt already shipped and the historical pace of shipments, which is well below the current AAFC estimate of 6.1 mmt forecast to be shipped this crop year.

The largest swing seen in export projections this month was a 500,000-mt drop to 2.4 mmt seen in the estimate for dry pea exports this crop year, given the 50% import tariff announced by India. Over the past five years, bulk shipments of dry peas through licensed channels have averaged 34.2% of the total crop year exports, as of week 15. The cumulative 885,400 mt shipped as of week 15 this crop year would project to a crop year export potential of 2.6 mmt, which is slightly higher than the current AAFC estimate.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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