Focus on quality, not quantity following StatsCan report

A canola field in northwestern Saskatchewan on Oct. 5, 2016 after the area was blanketed by wet snow.  (Lisa Guenther photo)

CNS Canada –– This year’s Canadian wheat production was up considerably from last year, according to updated estimates from Statistics Canada — but the quality of that crop remains questionable.

All-wheat production (spring, winter and durum wheat combined) was pegged at 31.7 million tonnes in 2016-17, which compares with 27.6 million in 2015-16. Of that total, durum hit a new record of 7.8 million tonnes — well above the 5.4 million grown the previous year.

“While the popular discussion will be about crop size, the trade knows that the situation is more about quality,” said Mike Jubinville of ProFarmer Canada.

“The focus this year for wheat isn’t so much the volume, it’s the quality,” said Jerry Klassen, manager of Canadian operations with Swiss-based GAP SA Grains and Products in Winnipeg.

“The big question mark is the quality of this crop… What will be feed, and what will be millable?” he said.

There’s only so much demand for durum in the export market, Jubinville added, and large poor-quality supplies could take upward of two years to work through domestic feed channels.

Looking at canola, StatsCan pegged the crop at 18.4 million tonnes — right in line with the year-ago level, but still on the low end of trade guesses.

“The trade is still in the mindset that they believe this crop is 19 million tonnes or bigger,” said Jubinville.

“It’s not overly bullish, but it’s definitely supportive for canola,” Klassen said of the canola number.

Both analysts were of the opinion StatsCan would eventually revise its canola number higher, but that may not happen until the 2016-17 ending stocks report is released in September next year.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow him at @philfw on Twitter.

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Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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