Canada Markets

A famous Warren Buffett quote -- used more commonly in financial markets -- comes to mind to explain what happened with the Statistics Canada July 31 Stocks of Principal Field Crops report and all of its many revisions: "Only when the tide goes out do you discover who's been swimming naked."

In this case, it took stocks of many of the grains and oilseeds to fall to uncomfortably or unrealistically low levels for Statistics Canada to finally be forced to address it.

Statistics Canada did just that with this report, implementing a "new methodology" that used "historical survey estimates and administrative data" to arrive at an estimate of on-farm stocks. That resulted in significant revisions higher to past on-farm stocks levels (displayed in the accompanying chart), allowing for increased production revisions and in some cases, changes to disposition totals.

Besides making analysis and interpretations difficult, the many revisions also skewed the headlines. For example, Statistics Canada reported "Total stocks of canola decreased 50.5% year over year to 1.6 million tonnes" suggesting a bullish outcome. Yet, Agriculture and Agri-Food Canada (AAFC) estimated the total would be 1.181 million metric tons (mmt) as recently as Aug. 20. USDA was closer with its estimate of 1.316 mmt from Aug. 12, but the nearly 1.6 mmt reported by Statistics Canada would certainly not be considered bullish by the market.

For canola, an upward revision of 483,000 metric tons (mt) in the July 31, 2024, on-farm stocks total allowed for a 277,000 mt increase in the production estimate (reported in June) and a 200,000 mt decrease in feed/waste/dockage (FWD) use for the year. The result was a 477,000 mt revision higher in July 31, 2024 canola ending stocks total and thus the 2025 beginning stocks.

That mostly flowed through the 2024-25 supply and disposition report (with only minor adjustments) to leave July 31, 2025, ending stocks 416,300 mt above what AAFC just recently estimated. Clear as mud. But given the level of producer deliveries since Aug. 1 amid limited harvest activity, it is likely much more accurate. And not a huge surprise to the market that had already been skeptical of the AAFC ending stocks estimate. It also highlights why the market has grown to avoid reacting to Statistics Canada updates, to any extent anyway.

"All wheat" on-farm stocks turned out to be the big winner in the revisions battle -- if you want to call it that. As you can see in the accompanying chart, July 31, 2023, on-farm stocks were revised higher by 81,000 mt while the 2024 on-farm total was increased a whopping 698,100 mt. That allowed production to be revised higher by 467,000 mt and FWD use to be reduced by 150,000 mt for the 2023-24 crop year. The balance of the increase came from the 81,000 mt increase of 2023 stocks, which was primarily from a bump in production, passed through to 2024.

With those revisions adding to beginning inventory for 2024-25, July 31, 2025, all wheat stocks came in at 4.112 mmt, 22.1% below the year prior level of 5.278 mmt according to the news summary. But in reality, 582,000 mt above the ending stocks that AAFC had predicted just a few weeks earlier. All the confusion was likely responsible for the limited impact on price.

The durum wheat portion of those revisions likely has the greatest potential to have a market impact. Following a very small revision for 2023, July 31, 2024, on-farm durum stocks were revised higher by an incredible 261,500 mt -- from 50,000 mt to 311,500 mt (making it the highest on-farm level since 2019). That allowed for a 159,400 mt revision higher in 2023 production (as reported in June) and a 98,000 mt reduction in FWD use. More importantly, it resulted in a similar sized beginning inventory for 2024-25 with most of that flowing through to result in a much higher July 31 stocks level than recently projected by AAFC. Statistics Canada officially reported July 31 durum wheat stocks at 496,000 mt, down 25.9% from last year's 669,000 mt. As far as the market is concerned, it was sharply higher than AAFC estimated Aug. 20 at 260,000 mt.

Wheat excluding durum had a similar story with the official report claiming July 31, 2025, stocks fell 21.5% from last year's level of 4.609 mmt to 3.616 mmt this year. But prior to all the revisions (on-farm stocks up 436,600 mt, allowing previous production to be revised up 380,000 mt as reported in June and FWD use to be reduced by 56,600 mt), AAFC had been expecting 3.270 mmt. So, a friendly outcome for certain, but somewhat disappointing compared to the headline.

Oats were not to be outdone with revisions to July 31, 2023, stocks flowing through to provide much more of a cushion than expected. On-farm stocks for that year were revised higher by a significant 228,000 mt, which flowed through to supply an equal revision higher for 2024 and beginning inventory for 2024-25. That resulted in the headline of "Total stocks of oats were down 24.3% year over year to 507,000 mt" according to Statistics Canada when the market had been looking for 325,000 mt based on the recent AAFC update. Even USDA would be surprised given its Aug. 12 estimate of 345,000 mt. In this case, the added cushion was entirely based on a cut in FWD use in 2022-23 of 228,000 mt to accommodate a similar increase in on-farm stocks.

Barley stocks were the most surprising unrevised total with July 31 stocks of 1.249 mmt compared to 1.152 mmt last year. AAFC had expected it would come in at 1.1 mmt, but total domestic use came in lower than expected despite higher than estimated FWD use. This may be taken with a grain of salt by the trade given the higher stocks estimate was due to a 13.2% increase in on-farm stocks more than offsetting a 6.6% reduction in commercial inventories. Given this is the first year of the methodology of Statistics Canada relying on their own "administrative data" to arrive at the on-farm total, confidence in market participants may be low. In the meantime, it is still a bearish print.

Data for corn and soybeans will not be released until Oct. 8 given the crop year-end for those two falls on Aug. 31.

On the pulse side, dry field pea stocks recovered with July 31 supplies up 63.5% from last year at 489,000 mt compared to 299,000 mt last year. It's worth noting that on-farm stocks have more than doubled year over year (at 252,800 mt versus 102,900 mt), so the same caution should be exercised here.

Lentils told a similar story with July 31 stocks up 232.7% from year earlier levels. At 549,000 mt compared to 165,000 mt last year, the increase was supplied by an on-farm total of 395,000 mt compared to just 27,000 mt last year.

July 31 flax stocks fell to 134,000 mt compared to 164,000 mt last year.

And finally, rye stocks witnessed a dramatic rebound, up 57.1% compared to last year at 143,000 mt versus 91,000 mt the previous year.

Ending with a bit of an apology, I realize that this is a lot, but there's no way of telling the complex story without telling the story.

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