Trade sees yields beating new StatsCan estimates

(Resource News International) — Upward revisions to Canada’s 2008-09 grain and oilseed production estimates, announced by Statistics Canada on Oct. 2, were largely expected by market participants who are already turning their attention to subsequent reports with expectations for even larger numbers.

“The crop numbers went up moderately and most of them will go up in the next (report) as well,” said Ken Ball of Union Securities in Winnipeg.

StatsCan pegged canola production at a record 10.87 million tonnes, up nearly 500,000 from the previous report and well above the 9.529 million grown in 2007-08. While the production number was large, many traders still expect actual canola production will end up considerably higher.

“It accurately reflects what the sentiment was at the time,” said Tony Tryhuk, manager of commodity trading with RBC Dominion Securities, on StatsCan’s canola production estimate.

“You can’t fault farmers for being conservative when they’re not quite sure what the eventual outcome will be,” he added noting that it sometimes takes a long time before the actual production numbers are released officially.

Winnipeg analyst Mike Jubinville of ProFarmer Canada noted that while the latest canola estimate was at the low end of trade expectations, the country will still be dealing with record supplies.

Traders, he thought, were already second guessing as to what the real canola number was. Jubinville said the large crop would limit the upside of the market going forward, as second-tier buying interest will need to be uncovered in order to move the supplies.

Wheat production, at 27.266 million tonnes, came in at the high end of trade expectations and compares with 20.054 million the previous year. Jubinville said that while he expected the crop would eventually hit 27 million, he didn’t think it would be that high in this report.

Barley, at 11.219 million tonnes, was in line with trade expectations and compares with 10.984 million the previous year.

Oats were revised higher to 4.321 million tonnes from an earlier estimate of 4.061 million, as had been anticipated by the trade. Canada grew 4.696 million tons of oats in 2007/08.

Jubinville said the size of the pea crop could cause some challenges for the market. StatsCan pegged pea production at 3.527 million tonnes, well above the 2.935 million grown the previous year. “It won’t be easy to find a home for all of it,” he said.

Trade StatsCan StatsCan StatsCan
estimates Oct. 2 Aug. 22 final
2008-09 2008-09 2007-08
Canola 10.50-12.00 10.870 10.375 9.529
All wheat 25.40-27.00 27.266 25.425 20.054
Barley 10.90-11.50 11.219 10.876 10.984
Flax 0.76-0.80 0.768 0.765 0.634
Oats 4.00-4.40 4.321 4.061 4.696

Statistics Canada: Estimated production of principal field crops, September 2008

Statistics Canada release, Oct. 2, 2008

Farmers, in mid-harvest, reported they expect to produce 10.9 million metric tonnes of canola, exceeding the previous record of 9.5 million tonnes produced in 2007. Wheat excluding durum production is reported to be up 35.6 per cent over 2007. In Eastern Canada, Quebec farmers anticipate a record production of 615,000 tonnes of soybeans.

At the time of the September farm survey, crop maturity and the fall harvest in the West were delayed by cool conditions and excess moisture. Harvest conditions were most advanced in southern regions but they improved considerably in most areas after the survey had taken place.

Canola production up

Canola production is expected to rise to 10.9 million tonnes, 1.4 million tonnes above the previous high of 9.5 million tonnes reported in 2007. This exceeds the pre-harvest July estimate by 495 000 tonnes. Production should increase mainly as a result of an above-average yield of 30.6 bushels per acre.

On the Prairies, where 99 per cent of canola is grown, farmers expect to exceed the previous record production in each province. The mid-harvest yields reported in the September survey showed an improvement over the pre-harvest yields from the July survey in both Manitoba and Saskatchewan.

Wheat expected to exceed five-year average

Farmers expect to harvest 22.2 million tonnes of wheat excluding durum, up 35.6 per cent from 16.4 million tonnes in 2007 and easily exceeding the previous five-year average (2003 to 2007) production of 19.4 million tonnes. A 15 per cent increase in harvested area and a yield of 42.8 bushels per acre account for this increase.

Production in Manitoba, Saskatchewan and Alberta is expected to increase over 2007, exceeding their previous five-year provincial averages.

Mid-harvest yields showed improvement in all Prairie provinces compared with the pre-harvest yields reported in July.

(Note: The September farm survey was conducted from Sept. 2 to Sept. 9, 2008.)

Soybean production expected to rise in East

Total soybean production is expected to reach 3.2 million tonnes, just short of the highest level of 3.5 million tonnes produced in 2006. Production should rise in both Quebec and Ontario, where 90 per cent of soybeans are grown.

Production in Quebec is anticipated to increase 30.3 per cent to 615,000 tonnes, a value exceeding the previous high of 535,000 tonnes set in 2006. The production increase is the result of a 31.6 per cent rise in harvested area from 2007.

Soybean production in Ontario is expected to rise to 2.3 million tonnes, up 16.3 per cent from 2007, due to a yield increase. Farmers reported a yield of 40.8 bushels per acre, up 7.8 bushels per acre over 2007.

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