StatsCan canola stocks top expectations, provide buffer

(Resource News International) –– There were a few unexpected surprises in the grain and oilseed stocks in all positions report from Statistics Canada Wednesday, with the biggest involving Canada’s canola supply.

Specifically, the federal statistics agency’s canola carryover projection surpassed everyone’s pre-report expectations.

Statistics Canada pegged Canadian canola stocks on-farm and in commercial positions as of July 31 at 2.123 million tonnes. This was well above pre-report projections that ranged from 1.1 million to 1.355 million tonnes and compares with the 2008-09 canola ending stocks level of 1.661 million.

The 2009-10 canola projection was also the second highest on record after 1999-2000, when canola ending stocks were a record 2.2 million tonnes.

“Looking at the report in general, there will be a lot of production numbers that will need to be adjusted upwards in order to balance off these numbers,” said Ron Frost, a Calgary-based analyst with Agri-Trend Marketing and the Frost Forecasting Corp.

Ken Ball, a broker with Union Securities in Winnipeg, agreed the canola stocks number definitely took market participants by surprise, with the new government numbers seen causing major adjustments to private supply/demand balance sheets.

“The biggest thing is that the 2009-10 canola production estimate will need to be adjusted significantly higher, with the ending stocks figure suggesting that canola output was at least 800,000 to one million tonnes higher than what it actually was,” said Mike Jubinville, an analyst with ProFarmer Canada.

“Instead of Canada’s 2009-10 canola production being 11.8 million, it should have been at least 12.5 million if not significantly higher.”

Ball said the ICE Futures Canada trading platform for canola reacted bearishly to the extra supply, but overall it was holding up fairly well. Part of that was linked to the uncertainty regarding Canada’s 2010-11 canola production.

The extra canola supplies were seen providing a bit of a buffer zone in case production in 2010-11 falls short of expectations, Frost said.

Time will tell

The extremely wet growing conditions during the growing season and during harvest were believed to have cut into yield potential and in turn lowered canola production ideas, Frost said.

However, he acknowledged that only time will tell whether the 2010-11 canola harvest will need those extra carryover supplies from 2009-10.

Jubinville said the StatsCan report showing higher than expected supplies for all wheat, barley and flaxseed were not necessarily out of line and had been anticipated.

StatsCan pegged 2009-10 all-wheat ending stocks in Canada at 7.82 million tonnes, which was at the high end of pre-report expectations that ranged from 6.5 million to 7.358 million. At the end of 2008-09, all wheat stocks totalled 6.547 million tonnes.

“The spring wheat figure in the all-wheat estimate was definitely higher than expected and came despite ideas that Canada’s spring wheat export picture had been more aggressive,” Ball said.

Barley stocks in Canada at the end of 2009/10 totalled 2.583 million tonnes, which was also at the high end of pre-report expectations that ranged from 2.276 million to 2.45 million. Barley ending stocks in 2008/09 totalled 2.843 million tonnes.

The oat ending stocks projection of 1.169 million tonnes was within pre-report projections that ranged from 1.075 million to 1.7 million.

Table 1. Summary of major crops from Statistics Canada’s grain and oilseed stocks in all positions report as of July 31, released Sept. 8. Figures in millions of tonnes.

  Trade    Total stocks,    Total stocks,
  estimates    July 31, 2010    July 31, 2009
     (actual)    (actual)
All wheat   6.500-7.358    7.820    6.547
  Durum   2.599-3.040    2.707    1.903
Canola   1.100-1.355    2.123    1.661
Barley   2.276-2.450    2.583    2.843
Flaxseed   0.200-0.375    0.289    0.229
Oats   1.075-1.700    1.169    1.527

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