(Resource News International) — Statistics Canada’s “grain stocks in all positions” report for the period ended March 31 held more than just a few surprises with the numbers for all wheat and canola coming in well below expectations, industry participants said.
Stocks of barley and peas, meanwhile, were extremely large.
“The wheat number is definitely lower than what the trade had been anticipating,” said Jerry Klassen, a Winnipeg wheat trader and analyst.
Without looking at the supply/demand numbers that were included with the report’s release, he said, domestic usage of feed wheat was greater than anticipated and also suggests the 2007-08 production number may have been slightly overstated.
StatsCan has pegged all wheat supplies on farm and in commercial positions as of March 31 at 15.536 million tonnes, compared with pre-report expectations which ranged from 16 million to 17.3 million tonnes and the year-ago level of 11.458 million.
“It appears that individuals in the livestock sector used feed wheat instead of feed barley where they could,” Klassen said, explaining the increased usage. Cheaper feed wheat values over feed barley also may have played a role, he said.
Barley supplies on farm and in commercial position were estimated by StatsCan at 6.054 million tonnes, well above pre-report projections that ranged from 4.5 million to 5.3 million. Supplies of barley at the same time a year ago were 4.46 million tonnes.
“The barley figure was a huge surprise, with the figure coming in well above the highest expectation,” said Keith Ferley, a broker with Union Securities Ltd.
He suggested the huge number could be a combination of factors, including less-than-expected feed usage, lower-than-expected herd numbers in Western Canada, and understated production estimates due to higher-than-expected yields last year.
“The key thing about the excess barley stocks situation is that it will guarantee that bids in the cash market remain depressed for a long time to come,” said Mike Jubinville, an analyst with ProFarmer Canada. “Values for feed barley will need to remain the cheapest of all the feed grains in order to work down those supplies.”
Jubinville also linked the high barley stocks to the absence of an export market for the commodity.
With feed barley stocks likely to remain at burdensome levels for some time to come, he said, there will be little need to import U.S. corn anytime soon, at least into Western Canada.
StatsCan pegged canola stocks on farm and in commercial position at 5.852 million tonnes. Pre-report estimates had called for canola stocks to range between 5.8 million and 6.3 million tonnes. Canola supplies at the same time a year ago totalled 4.577 million tonnes.
The report on the surface looks supportive to canola, Ferley said, but with all the 2007-08 numbers also being revised, some serious number-crunching will need to occur to see if this is true.
The numbers for canola confirm that export demand for the commodity has been strong, Jubinville said.
“The powerful export demand picture will need to continue, however, in order to avoid any buildup of supplies,” he said.
The oats estimate of 2.547 million tonnes was also considered to be on the high side. Supplies of oats at the same time a year ago were 2.328 million tonnes.
“The oats number was larger than last year, but that was fully anticipated by market participants,” Jubinville said.
Statistics Canada’s grain and oilseed stocks in all positions report, as of March 31, 2009, in thousands of tonnes.