CNS Canada — Grain and oilseed stocks data released Friday from Statistics Canada were bullish for canola and wheat — though analysts suggest the effects of the report on the market may be short-lived.
Figures for barley, lentils and peas were above year-ago levels, but movements in those markets are more likely be driven by demand factors.
Stocks of canola, as of March 31, were at about 6.6 million tonnes, according to the latest data from Statistics Canada. That number puts canola stocks at a four-year-low.
It also confirms market speculation that old-crop stocks are tight, said Mike Jubinville of ProFarmer Canada.
Despite some clarification, he added, there is plenty of uncertainty about old-crop stocks.
“The trade is still of the opinion that StatsCan is using too low of a production number for last year.”
Last year’s production has the potential to be bigger than the 18.4 million tonnes previously reported by StatsCan, he added.
Traders are uncertain about how much canola is still in fields — and the condition of those crops — though the stocks number shed light on the situation.
“It [the report] continues this idea that there is potentially a tight stocks scenario going into the end of the marketing year,” Jubinville said.
“But we’re really not entirely sure yet, because there’s these unknown variables of last year’s production. What’s the real number?”
Though Jubinville added that the figure is supportive, traders may have already baked it into the market. ICE Futures Canada canola is moving near “the granddaddy of overhead resistance,” a range of $530-$540 a tonne.
“It may be slightly bullish toward canola,” said Errol Anderson of ProMarket Communications.
“But this is one report that’s quickly forgotten, just because of the time of year,” he added.
Traders are watching the weather, and demand from key buyers, notably China, he noted.
Demand from China could taper off, as the country deciphers its credit situation.
Statistics Canada on Friday reported barley stocks at 4.6 million tonnes, all wheat at 16.6 million and durum at 4.1 million. All of those figures are above year-ago levels.
Last year, wetness resulted in a large amount of feed-grade and low-quality grain, which may be one reason why figures are ahead of year-ago levels.
Limited export demand for barley is one reason for the boost in stocks, Anderson said.
“It has to focus on the domestic feed market, and of course there’s not enough demand. So that’s why those numbers are maybe a little on the high end,” he said.
Canada’s feed situation could improve moving forward, he added, “and I’m actually a low-grade bull on barley.”
While the barley number wasn’t supportive, Jubinville said, it likely won’t affect values.
“It’s just not enough out of the range of expectations to really change anything, and we’re still dealing with a fairly large feed supply,” he said.
But for durum, while supplies were well-above last year, market watchers had expected “monster” durum stocks, and a figure of 4.1 million tonnes seems tame.
“Maybe we’re using up this durum faster than we thought,” Jubinville said, as lower prices drive up demand.
The all-wheat number was also lower than expected, though part of that may be comprised of lower-than-expected durum stocks.
It’s surprising, Jubinville said, that Minneapolis wheat futures would rise in reaction to a Canadian report, but he thinks that may be a feature in that market.
Statistics Canada pegged lentil stocks as of March 31 at 1.1 million tonnes, and dry peas at 1.7 million.
“I don’t think there’s anything there that really changes the story on lentils or peas enough to affect price,” Jubinville said.
Issues in markets outside of Canada matter more to prices than supply.
While pulses are not in a “bull market,” he added, values have improved with an extension of a fumigation policy from India.
“The supply/demand balance looks well-supplied; you could term it burdensome,” Jubinville said.
“But in and of itself I don’t think the numbers quoted today will put any new pressure the market that wasn’t already there.”
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.