Canada’s large canola stocks top expectations

CNS Canada — Releasing its Canadian year-end stocks estimates, Statistics Canada painted a picture Tuesday that’s mostly bearish for canola.

StatsCan’s figure for canola stocks as of Dec. 31, at 11.103 million tonnes, was at the high end of expectations, surpassing what some market watchers anticipated.

“I’m not sure if that means that StatsCan’s production number for 2014 is understated, and it’s bigger than 15.56 million tonnes,” said Mike Jubinville of ProFarmer Canada. “Or, the demand element for the first five months of the marketing year was not quite as strong as expected.”

ICE Futures Canada’s canola market initially moved lower Tuesday in reaction to the report, as it means ending stocks for canola could increase from previous estimates.

But macro issues, such as outside oilseeds and currency movement, will continue to be the main drivers going forward, Jubinville added.

The report was also bearish for flaxseed, oats and barley, as the stocks estimates were all either above or at the top end of pre-report guesses.

“It could be suggesting that more feed wheat is being substituted for barley in terms of the usage side of things. Or maybe the barley (production) number is also understated,” Jubinville said.

The report showed animal feed, waste and dockage usage for barley was at 2.67 million tonnes as of Dec. 31, down sharply from a year ago when 3.57 million tonnes were used.

This suggests StatsCan’s production figure of 7.12 million tonnes of barley for 2014-15 is too low, according to Jerry Klassen, manager of Swiss-based GAP SA Grains and Products in Winnipeg.

Total wheat stocks, at 24.818 million tonnes, were at the lower end of expectations — but it won’t likely impact prices as it doesn’t make a big difference to the broader wheat market, Jubinville said.

Wheat stocks, excluding durum, were fairly large at 20.76 million tonnes, as feed usage dropped significantly as well. Animal feed usage was estimated at 1.96 million tonnes, from 2.99 million tonnes in 2013. Klassen believes this also means StatsCan’s wheat production figure of 24.09 million tonnes is understated.

The one bright spot in the report is on pulses, such as peas and lentils. The two crops had very good usage through the first five months of the crop year, which will likely lead to very tight stocks.

“The pulses look like they’re on track to going to zero for ending stocks this year,” Jubinville added.

StatsCan showed stocks of lentils as of Dec. 31 at 755,000 tonnes, down from 1.45 million the year prior. Pea stocks were at 1.56 million tonnes, down from 2.34 million in 2013.

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

Table: A recap of Statistics Canada’s stocks report for the period ended Dec. 31, 2014, in millions of metric tonnes.