Trade expects mostly smaller crops in StatsCan report

(Dave Bedard photo)

CNS Canada –– Statistics Canada will release its first survey-based Canadian crop production estimates for 2015-16 on Friday, and figures for most major crops are expected to be down compared to last year.

Yields are likely to be all over the map as weather conditions varied vastly from region to region during the growing season.

Weather conditions ranged from extreme drought in parts of the western Prairies, to excess moisture in the eastern regions of Western Canada.

The areas affected by drought are some of the most prominent durum- and barley-growing regions, so traders will be watching closely to see how much the lack of moisture affected the two crops, said Jerry Klassen, manager of the Canadian office for Swiss firm GAP SA Grains and Produits.

A compilation of pre-report estimates shows the trade generally expects durum production to come in at 4.5 million to 5.2 million tonnes, which compares with 5.19 million in 2014-15. Barley production is pegged at 6.9 million to 7.2 million tonnes, from 7.12 million last year.

Unfavourable weather is likely to lower canola production, which was pegged at 12.5 to 14.5 million tonnes for 2015-16, down from 15.56 million last year.

But what StatsCan says in its report will likely change before the end of the year, as weather conditions and yield prospects have changed since the agency gathered the data.

“The data is more than three weeks old by the time we get it. So, we have to gauge what yield growers would have posted on their crop in the last week of July, when most of the data was gathered,” said Ken Ball of PI Financial in Winnipeg.

“I’m guessing that the (canola) yield was likely lower than what they have on their field now, just from the way the crop appeared at that time,” he added.

Because canola prospects have improved since the survey was done, production figures are apt to grow from StatsCan’s Friday estimate.

“I wouldn’t be surprised if this (canola) crop is well above 14 million tonnes by the time we’re done,” said Ball.

A similar story could be seen for the Canadian wheat crop, but not to the same extent as canola, as crop conditions haven’t improved as much over the last few weeks, according to Ball.

If StatsCan’s estimates are out of line with pre-report guesses, it could cause some reaction in both U.S. wheat futures, and the Canadian canola futures market.

“If the StatsCan report happens to come out above 14 million tonnes for canola, then we could be looking at a crop that’s above 15 million, and that could really start to change the undertones in canola,” Ball said.

“We would still be tight on canola, but not nearly as tight as it appeared a few months ago.”

After the report has been fully digested by traders, they will turn the focus back to weather for the Canadian spring cereal harvest, and to canola fields that are still developing.

“Quite a bit of the reseeded canola needs another few weeks of good weather,” Ball said. “It has accelerated with the warm weather, so maybe it could get by with another two weeks of frost free weather, and there’s nothing in the forecast right now that we’re going to see any frost threat in that time frame. But, you never know.”

Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Table: The trade’s pre-report estimates for the Aug. 21 Statistics Canada crop production report, which will show Canadian crop production estimates as of July 31, 2015, in millions of tonnes. Final yields from previous crop years included for comparison.

Pre-report ideas.   . 2014-15.    . 2013-14
Barley 6.900 – 7.200 7.119 10.237
Canola 12.500 – 14.500 15.555 17.966
Flax 0.950 – 1.110 0.847 0.724
Oats 3.050 – 3.435 2.908 3.906
Peas 3.150 – 3.250 3.445 3.961
All wheat.  . 24.800 – 27.100 29.281 37.530
Durum 4.500 – 5.200 5.193 6.505

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