(Resource News International) —Statistics Canada’s grain and oilseed stocks in all positions report for the period ended Dec. 31, 2008 held no surprises for the industry on Thursday.
Instead, the high and, in some cases, record total stocks numbers were largely in line with expectations given high seeded acres and strong yields during the 2008-09 growing season.
Canola total stocks for 2008-09 were pegged by StatsCan at 9.143 million tonnes, up from 7.395 million in 2007-08. All wheat total stocks were reported at 21.859 million tonnes, compared to 16.116 million the previous year. Barley total stocks for the current crop year were pegged at 8.5 million tonnes, up from 7.160 million in 2007-08.
The report’s total stocks numbers were not surprising, said Keith Ferley, a commodities broker with Union Securities Ltd. in Winnipeg.
The numbers were big but the trade had expected them to be high and as a result there was virtually no response in the futures markets following the release of the report, Ferley said.
The important thing about the report, however, is that it allows the trade to tighten up and fine-tune its own supply and demand figures going forward, giving everyone a more precise picture of the crop balance sheet.
The interesting figure in the report is the total stocks number for canola, because demand has been so strong this year, said Ken Ball, also a commodities broker with Union Securities in Winnipeg.
“The stocks are only roughly 1.75 million tonnes above last year and given that we came in with a large carry-in and then the size of the crop that we had, that number does not look really high to me,” said Ball.
Also, one would expect the pace of usage and exports to outpace last year so the stocks gap should narrow through the rest of the year, added Ball.
Based on the numbers, 2008-09 canola ending stocks level could total around 2.2 to 2.3 million tonnes, which “would be a pretty good performance to bring them down that low,” Ball said.
Big job ahead
Overall, there were no real surprises in the report, agreed Ron Frost, manager of AgProfit, the marketing division of Pike Management Group in Calgary. The report confirmed the challenges the economic downturn is providing and it provides a benchmark to move forward from, he said.
For canola, “we knew we had a big crop, so we were hoping the disappearance number would have been a bit better than it was,” he said.
Thursday’s figures show that Canada has a very big job to do in terms of using up the large supply of canola, Frost said.
“Some sporadic additional sales are not going to be enough to get down to a reasonable level carry-out number. We’re going to need continuous additional sales to non-traditional markets,” he said.
It is also disappointing that none of the grains controlled by the Canadian Wheat Board (wheat, durum and barley) had a strong sales program prior to the start of the crop year so that the exports could keep pace and make a dent into those large crops, Frost said.
As for the pulse crops, Frost said the report’s numbers reflect the problems the industry has had with broken contracts and credit issues in destination markets.
“It is pretty obvious that pulse export numbers are suffering and we have a big job to do in getting rid of some of the supply in those markets,” he said.
Mike Jubinville, president and lead analyst for ProFarmer Canada, commented that while the December stocks numbers certainly were not bullish, they were more or less in line with market expectations.
Jubinville pointed out, though, that total pea stocks were record-large at 2.6 million tonnes, as were total oat stocks at 3.267 million tonnes. Barley stocks were also a little higher than expected at 8.5 million tonnes as of Dec. 31, he noted.