(Resource News International) — Crop production numbers for canola in Statistics Canada’s first look at the 2009-10 season were lower than anticipated, but most industry sources believe estimates will only grow in future updates.
“The number for canola was certainly at the low end of pre-report expectations and could mean some supply tightness down the road,” said Mike Jubinville, an analyst with ProFarmer Canada in Winnipeg.
However, he added, the industry was already thinking producers “low-balled” surveyors for the federal statistics agency and that the size of the canola crop will rise in future updates, barring an early killing frost.
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StatsCan pegged 2009-10 canola production in Canada at 9.541 million tonnes. This compares with pre-report ideas that ranged from 9.5 million to 10.75 million tonnes and the 2008-09 level of 12.642 million.
“I would estimate that 90 per cent of the canola industry expects the production figure for the crop to increase,” said Ken Ball, a broker with Union Securities Ltd. in Winnipeg.
He acknowledged the findings of the report should translate into some nearby support, but because canola was viewed as being overpriced in comparison to other global oilseeds, the upside will be muted to some degree.
Jubinville felt that the low production figure for canola will result in the commercial sector rebuilding some of the weather risk premium back into the commodity.
But a private trade source, who did not want his name used, felt that some individuals are of the expectation that the canola estimate will need to be lowered in future reports to account for the poor weather that followed the survey.
“Some feel the hail damage in Alberta, and both dry and wet conditions, depending on the region of the Canadian Prairies, have hurt canola’s yield potential even further since the survey was conducted at the end of July,” the source said.
However, the source agreed that in his personal opinion, canola output would likely rise in further government updates barring any frost occurrences.
Barley
StatsCan pegged 2009-10 barley production at 8.948 million tonnes. Pre-report expectations had ranged from 8.750 to 9.470 million tonnes while output in 2008-09 totalled 11.781 million tonnes.
“Anytime barley output drops below nine million tonnes a year, the industry does take notice as this normally translates into some tight ending stocks,” Jubinville said.
The upside in barley, however, will be muted from a feed perspective, especially in view of the amount of distillers dried grains available from the ethanol sector and the potentially large U.S. corn harvest, Jubinville said.
Canada’s malting industry, however, will not be happy with the production estimate and could step up purchases of high quality barley in order to cover future requirements, the private trade source said.
Wheat
StatsCan estimated all wheat output in Canada during 2009-10 at 23.614 million tonnes, which was at the high end of pre-report projections that ranged from 20.1 million to 23.31 million tonnes. In 2008-09, all wheat output in Canada was 28.611 million tonnes.
“While the wheat estimate may have come in at the top end of the range, it wasn’t necessarily a surprise,” Jubinville said.
He noted that if one had taken the Canadian Wheat Board’s average production estimate for all wheat in Western Canada, and then added in a couple of million tonnes for wheat output in Eastern Canada, the numbers add up pretty well.
Other
The only other surprise was the higher than expected production estimate for flaxseed, the private source said.
StatsCan pegged 2009-10 Canadian flaxseed output at 915,000 tonnes, which was up from the 2008-09 level of 861,100. No pre-report estimates had been available for flaxseed.
“What I find interesting, is that flaxseed output is up, but yet the crop is grown in the same regions as canola,” the source said.
If the weather for canola has hurt yield potential, the source said, why has flaxseed not been impacted?
As for the remainder of StatsCan’s production estimates, most were “surprisingly” in line with pre-report expectations, Ball said.
Statistics Canada’s estimates and pre-report ideas for 2009-10 Canadian production, in millions of tonnes.
| Trade estimates | —-StatsCan estimates—- | ||
| 2009-10 | 2008-09 | ||
| Canola | 9.50 – 10.75 | 9.541 | 12.642 |
| All wheat | 20.10 – 23.31 | 23.614 | 28.611 |
| Barley | 8.75 – 9.47 | 8.948 | 11.781 |
| Oats | 2.87 – 3.15 | 2.967 | 4.272 |
| Peas | 2.80 – 3.10 | 3.113 | 3.571 |
| Flaxseed | n/a | 0.915 | 0.861 |
