Tightening canola stocks to put more pressure on 2014-15 crop

(Dave Bedard photo)

CNS Canada — Statistics Canada on Friday morning released its estimates for 2013-14 ending stocks, pegging canola supplies at 2.36 million tonnes, at the low end of expectations.

“Canola was on the light side, maybe 300,000 tonnes lower than what most people were expecting, so it’s enough to underpin the market,” said Ken Ball of PI Financial in Winnipeg.

The report caused ICE Futures Canada canola contracts to initially jump about C$2 a tonne higher Friday morning, but the support isn’t likely to last long, Ball said. Though, the tighter figure will put more pressure on the 2014-15 canola crop to produce at least 14.5 million tonnes.

“If the crop starts looking like it’s going to come in closer to what that StatsCan number (13.91 million tonnes) was in August, with a carryout like this and a crop like that, canola supplies are going to be very, very tight,” Ball added.

Ball thinks it’s possible for the canola crop to be larger than 14.5 million tonnes this year, but it’s still up in the air because of recent weather-related issues in parts of Western Canada.

Jon Driedger, market analyst with FarmLink Marketing Solutions in Winnipeg, isn’t worried so much about lower yields, because crops generally look good from a production standpoint.

“People will be zeroed in on the challenge of getting this crop off this year with the quality issues and the ongoing rain,” he said. “And, how that’s going to shake out is still a huge question mark. I think until the crop is in the bin it’s going to be really hard to know how bad it is or isn’t.”

StatsCan’s ending stocks estimates for most other crops were in line with expectations, though the all-wheat figure was slightly below the range.

“In the world of wheat it’s literally a drop in the hurricane,” Ball said, adding that the figure could be slightly significant for North American markets, but not on a global scale.

Driedger added the all-wheat number of 9.8 million tonnes is “a big number.”

Most crops will see an increase in ending stocks from 2012-13, due to huge yields and production in 2013-14, which could provide a cushion if production drops significantly this year, he added.

— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Table: A recap of Statistics Canada’s stocks report for the period ended July 31, 2014. Figures in millions of metric tonnes.

  Estimated  
  Pre-report total stocks at    Total stocks,
  estimates July 31, 2014 July 31, 2013
All wheat 10.50 – 12.30 9.795 5.052
   Durum 1.60 – 2.00 1.813 1.152
Canola 2.30 – 3.85 2.363 0.588
Barley 1.70 – 2.25 1.924 0.983
Flaxseed 0.05 – 0.13 0.100 0.071
Oats 1.00 – 1.40 1.031 0.506

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