StatsCan confirms small crops, but reaction subdued

CNS Canada — Canada’s grain and oilseed production will be much smaller than the record crops of 2013-14, according to survey results Statistics Canada released Thursday — but a lack of reaction in futures markets was seen as a sign that the trade is already looking beyond the report.

“All of the numbers came in at the low end of trade expectations, which is bullish on the surface,” said Mike Jubinville, of ProFarmer Canada.

However, the immediate reaction in the futures market was subdued, with ICE Futures Canada canola contracts only up $1-$2 per tonne and U.S. wheat futures narrowly mixed.

“Wheat, durum, canola, barley, oats, peas, lentils… everything with the exception of flax looks bullish in this report,” said Jubinville.

“It should be friendly,” added Chuck Penner of LeftField Commodity Research on the smaller production numbers, but “everybody is more focussed on the (U.S.) soybean crop and what it will do.”

Penner expected the smaller Canadian crops would likely have more of an impact on basis levels than the futures going forward, with Canadian cash bids for wheat, canola, and oats likely showing some strength relative to their U.S. counterparts, and barley performing strongly relative to corn.

StatsCan pegged Canadian canola production for 2014-15 at 13.91 million tonnes, which compares with the record 17.96 million-tonne crop grown in 2013-14. The number was at the low end of trade estimates, but would be in line with historical averages and the crop grown in 2012-13.

The smaller canola production should see ending stocks tighten for 2014-15, and may also reduce the transportation issues over the upcoming season, said Jubinville.

All-wheat production (including durum) was pegged at 27.7 million tonnes by StatsCan, which was at the low end of trade guesses and nearly 10 million tonnes below the 37.53 million grown the previous year. Of that total, durum was estimated at 4.95 million tonnes, which compares with 6.51 million in 2013.

Oats were estimated at 2.64 million tonnes, from 3.89 million the previous year, while barley was pegged at 7.16 million tonnes, well below the 10.24 million harvested in 2013.

Peas, at 3.56 million tonnes, were down slightly from the 3.85 million-tonne crop the previous year, while lentils were up slightly at 1.93 million tonnes, from 1.88 million.

Flaxseed was another of the few major crops to see increased production on the year, with StatsCan forecasting a 908,100-tonne crop. That compares with 712,300 tonnes in 2013-14.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Table: A quick summary of Statistics Canada’s crop production estimates for 2014-15, in millions of tonnes, released Aug. 21, 2014. Pre-report estimates are included for comparison.