CNS Canada — Canada’s canola and wheat production likely ended up larger than earlier expectations, but just how much more remains to be seen, as industry participants await the Statistics Canada production report due out Wednesday.
“The finish seemed to be better than what the weather looked like earlier in the year,” said Neil Townsend of FarmLink Marketing in Winnipeg. He expected to see slight upward revisions for most of the crops from earlier estimates.
For canola, “any number that doesn’t start with a ‘two’ will be perceived as bullish by the market… anything from 20 to 21 (million) will be fairly neutral for the market… and anything above 21 (million) will be bearish for the market,” said Townsend.
Trade guesses on the size of the canola crop range from about 19.7 million to 21.2 million, with average guesses coming in at around 20 million. That compares with the September estimate of 19.7 million and year-ago production of 19.6 million.
“It will be an interesting report; it has the potential to be quite volatile,” said Ken Ball of PI Financial in Winnipeg, and “given the usage pace we’re maintaining, a 20 million-tonne crop still isn’t adequate.”
Projected usage of 20.5 million tonnes of canola in 2017-18 would “draw down stocks to some potentially tight levels,” he said.
The wheat harvest also beat earlier expectations in many areas, with possibly record yields in Manitoba, said Bruce Burnett, director of markets and weather information with Glacier FarmMedia.
Trade estimates on the size of Canada’s all-wheat production (including durum) range from 27 million to 29.5 million tonnes, which would compare with the previous StatsCan estimate of 27.1 million. While most market participants expect an upward revision, the crop will still come in well below the 31.7 million tonnes grown in 2016.
Tighter Canadian wheat stocks could be a bit supportive for prices, but large world supplies will remain burdensome overall, according to Burnett.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.
Table: Pre-report trade estimates, in millions of tonnes.
|trade estimates, .||model-based, .||survey-based,|
|Durum||4.200 – 5.100||4.299||3.898||7.762|
|All wheat. .||27.000 – 29.500||27.130||25.541||31.729|
|Oats||3.300 – 4.000||3.802||3.685||3.195|
|Barley||7.200 – 7.900||7.306||7.212||8.784|
|Flaxseed||0.500 – 0.580||0.501||0.507||0.588|
|Canola||19.700 – 21.200||19.708||18.203||19.601|
|Peas||3.700 – 4.200||3.862||3.793||4.836|
|Lentils||2.500 – 3.100||2.439||2.291||3.248|