Market participants say there were few surprises in Statistics Canada’s production estimates for 2008, which were released this morning. However, the upward revision to the 2007/08 canola production estimate by the government agency managed to garner some major attention.
Statistics Canada pegged 2008/09 canola output at 10.375 million tonnes, which compares with pre-report expectations that ranged from 10.1 million to 11.2 million tonnes. Canola output in 2007/08, meanwhile, was revised upwards to 9.528 million tonnws from 8.751 million.
“Essentially the revision means that there is a whole lot more canola in Canada,” said Tony Tryhuk, vice-president and manager of commodity trading for RBC Dominion Securities Inc. “The higher old crop production figure raises the old crop ending stocks projection which when added with the new canola production forecast, boosts the overall supply total significantly.”
Tryhuk said several private individuals had been working with a higher 2007/08 canola ending stocks forecast based on usage numbers and the visible supply base.
All of the 2008/09 production estimates for Canada’s grain and oilseed crop from Statistics Canada were seen being raised in future reports.
“The survey conducted by the government agency occurred before growing conditions for the various crops improved,” Ken Ball, a broker with Union Securities Ltd., said. “Yields for the various crops have since improved a bit, and in turn should result in production being up.”
Statistics Canada pegged 2008/09 all wheat output at 25.425 million tonnes, which fell within pre-report expectations that ranged from 24.67 million to 26.50 million tonnes. Output in 2007/08 totalled 20.054 million tonnes.
Oats production in Canada was forecast by Statistics Canada at 4.060 million tonnes, which was above pre-report ideas of 3.34 million to 3.70 million. Oats output during 2007/08 was 4.696 million tonnes.
“There is a lot of oats out there and that is already being reflected in the cash market,” said Mike Jubinville, an analyst with ProFarmer Canada.
He said while the acreage base was slightly higher, the yields across most of Western Canada were coming in better than expected, which in turn resulted in the large production forecast.
“The improved growing conditions after the survey was conducted was seen resulting in a higher output forecast for the crop in future reports,” Jubinville said. “There will be no shortage of oats for end-users.”
Barley output in 2008/09 was projected by Statistics Canada at 10.876 million tonnes. This was within trade expectations that ranged from 10.300 million to 11.000 million tonnes and compares with the 2007/08 level of 10.984 million.
Ball said that depending on the quality of the barley harvest, that supplies appear to be fairly big.