The grain and oilseed stocks in all positions report Statistics Canada released Friday generally fell within industry expectations, with the exception of canola, with the stocks number suggesting 2010-11 carryover will be much tighter than anticipated.
The federal statistics agency pegged Canadian canola stocks as of Dec. 31, in the 2010-11 crop year at 8.242 million tonnes, well below the 9.437 million at the same time a year ago.
“From a supply/demand point of view, canola usage has been greater than anticipated and can only point to ending stocks of the commodity being much tighter than the number the industry has been working with,” said Ron Frost, a grain and oilseed analyst with Frost Forecast Consulting of Calgary.
Gerry Klassen, manager of GAP Grain in Winnipeg, agreed consumption of canola from the domestic and export sectors has been greater than what market participants were expecting and will be reflected in the carryout estimate for 2010-11.
The industry had also been thinking the canola production figure StatsCan had been working with was on the low side, but this report seems to confirm the agency is on target with its numbers.
The market analysis division of Agriculture and Agri-Food Canada had been working with a 2010-11 Canadian canola ending stocks figure of 1.1 million tonnes.
Klassen, however, felt that with the latest numbers, the supply/demand ending stock tables of the various participants will be revised downward to the 600,000- to 800,000-tonne range, which would be extremely tight.
Frost suggested some rationing of canola was likely in the months ahead, in order to avoid supplies becoming that tight. He forecast 2010-11 canola carryover in Canada in the 850,000-tonne range.
“I view the numbers as slightly supportive to the canola price outlook. But markets are not necessarily going to immediately leap higher on the news,” said Mike Jubinville, an analyst with ProFarmer Canada.
Much of canola’s upward price momentum over the past number of months has been driven more by developments in global oilseed and veg oil markets.
However, Jubinville said, “if the current monthly rate of canola usage were to continue, we are going to chew through the entire Canadian canola supply by the end of the current marketing year, meaning a zero 2010-11 carryout.”
This obviously will not happen, he added, as some process of rationing demand (crush, exports or both) will occur to ensure a carryout in the one million-tonne level.
Statistics Canada pegged all wheat supply (on farm and in commercial position) at 20.232 million tonnes, down from the year ago level of 22.524 million.
The level of all wheat in Canada was a bit lower than the market had been anticipating, but was not necessarily a surprise, Klassen said.
The durum stocks figure of 3.731 million tonnes was pretty much in line with what the industry had been working with. Last year at this time, durum supplies totalled 5.674 million tonnes.
Frost said the industry will certainly be challenged in terms of trying to move the extra amount of feed wheat that is in the supply total.
Statistics Canada pegged barley stocks as of Dec. 31 at 5.734 million tonnes, down from 7.554 million at the same time a year ago.
“While barley supplies are down from the year-ago level, they are still seen as being on the high side,” Klassen said.
Oat supplies in Canada were pegged as of Dec. 31 at 2.105 million tonnes, down from 3.03 million at the same time last year.
The StatsCan report confirmed the market may need to boost prices in order to ensure producers in Western Canada plant enough acres to oats in the spring to meet production demands, Klassen said.
Table 1. Statistics Canada grain and oilseed stocks in all positions report. Figures are as of Dec. 31, 2010, in thousands of tonnes. Source: Statistics Canada.