CNS Canada — Canada’s 2014-15 wheat and canola crops both ended up considerably larger than early guesses, according to updated production estimates released Thursday by Statistics Canada.
Production, however, was still well below the record levels seen the previous year.
After the canola crop was pegged at 14.08 million tonnes in StatsCan’s October report, average trade guesses were predicting actual production closer to 14.5 million.
However, StatsCan’s number came in Thursday a million tonnes above that average estimate, at 15.56 million tonnes. Canada grew 17.97 million tonnes of canola in 2013-14.
Ahead of the report, analyst Wayne Palmer of Agri-Trend Marketing said, “if (canola production) is anywhere between 14.7 (million) and 15 (million tonnes) it will be construed as bearish, 14.5 will be neutral, and if it’s 14.3 (million) or lower we’ll have a tight S/D.”
While production easily topped that 15 million-tonne mark, the immediate reaction in the futures was relatively subdued.
“A number north of 15 (million tonnes) was not particularly surprising,” said Jon Driedger of FarmLink Marketing Solutions Thursday morning. The lack of movement in the futures likely reflected the fact that the trade may have factored in the larger production already, as prices have dropped in recent weeks, he said.
“We have really good demand for canola; our exports are cranking away, and the domestic crush is running ahead of last year’s pace.”
“15.5 (million tonnes) all of a sudden changes the dynamic of projected ending stocks,” said Mike Jubinville of ProFarmer Canada. The carryout will still be well below the previous year, as demand is strong, “but we may not be as tight as we thought we would be.”
The situation was similar in wheat, as most trade guesses were calling for an upward revision of about 500,000 tonnes from the October estimate of 27.48 million tonnes, instead of the 29.28 million-tonne crop StatsCan reported. Production is still well below the 37.53 million tonnes grown the previous year.
“To add two million tonnes, in the terms of the total picture, is not a huge deal in the broader (wheat) picture,” said Driedger.
In addition, while wheat production may be above earlier estimates, the quality breakdown of those extra supplies are still unknown. The more important thing from a pricing perspective will be the breakdown in quality and the spread relationships between the grades and proteins, said Jubinville.
Of the wheat total, durum was pegged at 5.19 million tonnes, which compares with the earlier estimate of 4.79 million and the 2013-14 production of 6.51 million tonnes.
Flaxseed was one of the few crops that saw a downward revision compared to the previous report, with StatsCan now pegging the crop at 847,000 tonnes, compared to 922,000 tonnes in the October report. Canada grew 724,000 tonnes of flaxseed in 2013-14.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
Table: A quick summary of the Statistics Canada crop production estimates for 2014-15 (Aug/Jul). Pre-report estimates are included for comparison. Production in millions of metric tonnes. Source: Statistics Canada.
|Dec. 4,||Oct. 3,||Pre-report||Final,|
|Durum wheat||5.193||4.756||4.600 – 5.400||6.505|
|All wheat||29.280||27.481||27.400 – 28.100||37.530|
|Oats||2.907||2.685||2.600 – 2.800||3.906|
|Barley||7.119||7.119||7.000 – 7.400||10.237|
|Flaxseed||0.847||0.922||0.900 – 1.000||0.724|
|Canola||15.555||14.079||14.000 – 14.900||17.966|