Large crops seen making up for tighter Canadian stocks

Statistics Canada is expected to confirm relatively tight ending stocks of most major Canadian grains and oilseeds when its report on stocks as of July 31 is released Friday.

However, with large production prospects to more than make up for the small carryover, market participants were uncertain what the stocks data would do for prices.

“We’ll see some pretty tight numbers as of July 31,” said analyst Jon Driedger of FarmLink Marketing Solutions in Winnipeg — although he thought upward revisions to the production totals for a number of crops was also a possibility, given that current usage numbers from the Canadian Grain Commission and other sources don’t line up with the official supply estimates.

The canola number will be followed closely, as the pace of export and crusher demand over the past year would indicate actual production in 2012 was larger than currently forecast by StatsCan.

Canadian canola stocks as of July 31 are estimated at anywhere from 250,000 to 900,000 tonnes, which would compare with 707,000 tonnes at the same point the previous year. Anything under a million tonnes is considered tight as far as the crop is concerned.

“On paper, it pencils out tight… but I’m not sure that’s a big issue now because we have a good crop coming in,” said Ken Ball, a broker with PI Financial in Winnipeg.

“At this stage of the year, the focus is entirely on the upcoming yield,” added Jerry Klassen, manager of GAP SA Grains and Produits in Winnipeg.

“If we had a very adverse summer, tight stocks and a smaller crop, this would be more sensitive, but given the fact we’re hearing of very good yields it lessens the importance of the stocks report,” he added, noting the report will help industry participants fine-tune their own supply/demand numbers.

“If (StatsCan) came in with a really bearish number it might raise some eyebrows, but by-and-large everyone has moved past that,” Driedger said.

Wheat stocks, as of July 31, are estimated at anywhere from 3.7 million to 6.5 million tonnes, which would compare with 5.932 million at the same point in 2012. Of that total, trade guesses place the durum carryover at about 900,000 to 1.3 million tonnes, which would compare with 1.486 million the previous year.

Barley ending stocks are estimated at about 700,000 to 1.2 million tonnes, which compare with 1.195 million in 2012. Oats stocks are generally expected to be in the 200,000- to 500,000-tonne range, down from 795,000 the previous year. Flaxseed carryover is expected to be very tight at only 50,000 to 80,000 tonnes, from 137,000 at the same time in 2012.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Table: Preliminary estimates for selected crops to be included in Statistics Canada’s report on grain and oilseed stocks in all positions as of July 31, scheduled for release on Sept. 6, 2013. Figures in millions of tonnes.

  Total stocks, Total stocks,
  July 31, 2013, July 31, 2012,
  estimate actual
All wheat 3.700 – 6.500 5.932
   Durum 0.900 – 1.300 1.486
Canola 0.250 – 0.900 0.707
Barley 0.700 – 1.200 1.195
Flaxseed 0.050 – 0.080 0.137
Oats 0.200 – 0.500 0.810

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