Wheat stocks below industry expectations

(Resource News International) — The grain and oilseed stocks in all positions report from Statistics Canada Tuesday morning contained few surprises overall, with the exception of wheat, which saw tighter than expected supplies, market participants said.

Mike Jubinville, an agricultural consultant with ProFarmer Canada in Winnipeg, said the report confirmed the general tightening scenario many industry analysts already thought was underway, with the exception of oats. It’s unlikely the report will have any significant impact on most market values, he said, as lower supply had already been factored in.

Darren Frank, a market analyst with FarmLink Marketing Solutions at Oakville, Man., said the carryover stock figures, particularly for special crops, will intensify the fight for acreage this spring.

“The numbers for the special crops are tight so we have an acreage fight heating up. We need to find more land for these crops,” Frank said.

Wheat stocks were the biggest surprise in the Statistics Canada report, according to most industry sources. Early estimates ranged from 16 to 16.9 million tonnes but the report pegged all-wheat stocks well below that amount at 15.147 million tonnes. That’s down considerably from the Dec. 31, 2006 all-wheat stocks level of 21.573 million tonnes.

Durum stocks meanwhile, were pegged at 2.870 million tonnes
as of Dec. 31, 2007. That compares to the 2006 level of 4.072 million tonnes.

Tony Tryhuk, a trader with RBC Dominion Securities in Winnipeg, said the low all-wheat stocks number is adding further fuel to the fire in terms of the bullishness in the wheat market. He said expectations had been for a low number but that the figure released was smaller than anticipated.

Canola stocks for 2007, at 6.502 million tonnes, were unsurprising, according to most traders. Tuesday’s figure is in line with earlier estimates of 6.4 to 6.5 million tonnes. Canola stocks declined from the 2006 level of 7.166 million tonnes.

“I think the number implies that the production level is a little higher than Statistics Canada had originally said but overall the canola number is not going to materially affect the market,” Tryhuk said.

Frank said the canola figure may have been marginally higher than analysts expected, mostly due to the late harvest seen in Alberta. “They may have found a few more bushels there,” he said.

In regards to barley, the carryover level was also in line with industry expectations. Barley stocks as of Dec. 31, 2007 were reported at 7.105 million tonnes. That compares to the previous year’s amount of 7.473 million tonnes.

Flaxseed carryover stocks were reported at 482,000 tonnes, well below the 2006 amount of 870,000 tonnes.

Oats were the single exception in the report, with levels higher as of Dec. 31, 2007 than the same time in 2006. Statistics Canada pegged oat stocks at 2.703 million tonnes, higher than the previous year’s level of 2.372 million tonnes.

Statistics Canada grain and oilseed stocks at Dec. 31, 2007 compared to estimates and year-end 2006 numbers, in millions of tonnes.