CNS Canada — Statistics Canada released its first survey-based production estimates for the 2015-16 crop year Friday morning, with canola and wheat figures coming in at the lower end of expectations.
But the grain trade is shrugging off the report, as it believes final production numbers for most crops will be larger than what Statistics Canada estimated in Friday’s report.
“I think everyone in the marketplace is of the opinion that the crop conditions have improved since the survey was taken, so this crop is bigger than what the numbers suggest,” said Mike Jubinville of ProFarmer Canada.
StatsCan pegged 2015-16 wheat production at 24.625 million tonnes, at the lower end of expectations and below the 29.281 million tonnes grown in 2014-15.
The final number is likely to be about a million tonnes larger, due to improved weather conditions since the survey was conducted in late July, Jubinville added.
As of Friday morning, U.S. wheat futures markets weren’t reacting to the report, as StatsCan’s estimate was very similar to the latest U.S. Department of Agriculture projection for Canadian wheat, he noted.
StatsCan pegged canola production at 13.343 million tonnes, in the middle of pre-report guesses, but down from the 15.555 million tonnes grown last year.
“The StatsCan (canola) number is too low. It will be adjusted higher in the next two months — I think closer to 14 million tonnes. And our carryout will probably balloon above a million (tonnes),” said Errol Anderson of ProMarket Communications.
Because the production number for canola is likely inaccurate, the trade is dismissing the report and turning the focus back onto North American harvest conditions and China’s economic situation, Jubinville said.
While there are worries about China reducing its purchases of canola due to its economic problems, he said he believes they’ll still be a large buyer of Canadian canola.
“All the fearmongering that’s going on about economic turmoil in China restricting or curtailing their commodity purchases, I don’t think is going to apply to canola,” Jubinville said. “So they’re going to buy whatever they need, and going to eat up whatever extra production we add to this production number.”
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @TerrynShiells on Twitter.