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Markets to closely watch StatsCan’s stocks report

Winnipeg (Resource News International) — Market participants will closely monitor
Tuesday’s grain and oilseed stocks in all positions report
scheduled to be released by Statistics Canada — especially its
figures for 2006-07 wheat, barley and canola carryover,
industry sources said Monday.

“All the numbers will be used to tidy up supply/demand
estimates for 2006/07 and set up the 2007/08 projections,” said Ken
Ball, a broker with Union Securities in Winnipeg.

The 2006-07 figures were expected to also provide a look

into what usage has been so far and whether supplies of wheat,
canola, oats and barley are larger or smaller than what was being
used in private projections, Ball said.

“There is always room for some kind of surprise, but I doubt
that there will be any in this report,” Ball said. “Some juggling
of numbers was expected given the adjustments made to production
in view of updated census data.”

The wheat ending stocks forecast for 2006-07 was likely to
be the most closely viewed estimate, Ball predicted.

“Right now global market participants are obsessed with
every 100,000 tonnes of lost wheat production,” he said, noting
that any low figure for the old crop year, will reduce the
available wheat supply in Canada for 2007-08.

Phil Speiss of RBC Dominion Securities estimated Canadian
all wheat ending stocks for 2006-07 at roughly 7.5 million
tonnes, but indicated the trade was working with a number probably
200,000 tonnes above or below that estimate.

“A smaller than expected number could really tighten things
up for 2007-08, especially in wheat and barley,” Speiss said.

“The 2006-07 canola ending stocks estimate, meanwhile, will
determine how much of a cushion the canola industry has to work
with in 2007/08,” said another broker, not wanting his name used.

“Just how much juggling did Statistics Canada do with its
numbers, is the question the grain industry has already been
asking,” the broker said.

In terms of the canola carryout estimate, there is a chance
supplies could be a bit larger than anticipated, said Tony Tryhuk with
RBC Dominion Securities.

Estimates for 2006-07 canola ending stocks ranged from a low
of 1.5 million tonnes to as high as 1.8 million, with most market
participants working with a 1.6 million- to 1.7 million-tonne
projection, Tryhuk speculated.

“If one takes the 2006-07 crush estimate from the Canadian
Oilseed Processors Association, take into consideration Canadian
Grain Commission export numbers and increase them a bit to take
into account any U.S. direct rail deliveries of canola, use a
standard residual number of about 400,000 tonnes, and use updated
production numbers, one gets a canola carryout of roughly 1.7
million,” Tryhuk said.

He said the key will be what kind of on-farm figure exists
for canola.

“We know the commercial trade had been holding onto 1.1
million tonnes of canola, and in turn producers were probably
holding onto about 400,000 to 500,000 tonnes on farm,” Tryhuk said.

He said there were also ideas that western Canadian
producers were good movers of canola during the last few months
of 2006-07, which might result in a bit tighter supply of canola.

Ball said of the commodities, canola probably is the easiest
for the industry to track.

“The industry generally has good access to weekly and
monthly figures, which provides a pretty good look at what is
happening in canola, so the chance of a surprise should be
reduced,” Ball said.

In terms of barley, the trade will be looking to see if
its domestic usage numbers line up, Ball said.

“The most important thing for analysts is what has domestic
usage been,” as that’s something the industry can not measure
directly, a cash dealer commented.

Ball agreed the feed usage figure for barley from
Statistics Canada was always interesting, as the feed usage by the
domestic sector was very difficult to gauge.

Flaxseed and oats will also likely be a couple of the crops
that the industry will want to keep a close eye on in terms of
usage, the cash dealer commented.

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