Canola supplies on-farm and in commercial position at the end of 2011-12 are seen as being on the "extremely tight" side — and market watchers say that will make it more difficult for exporters and domestic processors to meet targets moving forward.
The canola ending stocks figure, in data released Friday by Statistics Canada for the period ended July 31, was within trade expectations, but "one has to take into consideration the reports of poor yields, as the harvest of the 2012-13 canola crop is falling short," said Ken Ball, a broker with Union Securities in Winnipeg.
Demand for canola from both sectors was already running at a record-high pace in comparison to the year-ago level, he said.
"With Canadian canola output in 2012-13 unlikely to match the 15.4 million-tonne forecast from Statistics Canada, there will need to be at least one million tonnes or more of demand shaved as a result," Ball said.
Canola production in Canada, with the poor yields being factored in, was now more likely in the 14 million- to 14.5 million-tonne range.
The jump in StatsCan’s 2010-11 canola ending-stock estimate also didn’t go unnoticed and meant that the production forecast for last year’s canola crop was actually higher than what was originally projected, said Mike Jubinville, an analyst with ProFarmer Canada.
One market participant felt that the canola number was just that, and would not have an impact on the commodity’s price direction.
"Canola is a follower of the other oilseeds, and that is not going to change," a commodity trader said, not wanting his name to be used.
Canola stocks on-farm and in commercial position were pegged by Statistics Canada at 788,000 tonnes. Pre-report estimates had ranged from 600,000 to 1.3 million; stocks totalled 2.198 million at the same time a year earlier.
StatsCan’s all-wheat and barley projections were within pre-report ideas. The government agency estimated all wheat supplies in Canada as of July 31 at 5.879 million tonnes, which compared with pre-report suggestions of 5.3 million to 6.7 million. At the same time a year ago, stocks of all wheat totalled 7.176 million.
Barley stocks as of July 31 totalled 1.222 million tonnes, also falling within pre-report expectations that ranged from 600,000 to 1.7 million. Last year at the same time barley stocks in Canada totalled 1.441 million tonnes.
Ball said the stocks picture for barley for the 2012-13 season could tighten significantly, given that the crop looks like it may come in a bit smaller than anticipated and that demand for the commodity continues to grow, especially from U.S. outlets looking to replace record-priced U.S. corn.
Canadian oat stocks totalled 817,000 tonnes — a bit bigger than pre-report ideas which ranged from 500,000 to 800,000 tonnes. Last year at the same time, oat supplies were 769,000 tons.
Another forecast that raised a few eyebrows was for pea supplies. "The forecast was not a surprise, as the industry was anticipating those stocks to be on the tight side," Jubinville said.
StatsCan pegged pea supplies in Canada at the end of the 2011-12 crop year at just 276,000 tonnes. Pre-report expectations had ranged from 100,000 to 350,000 tonnes and totalled 535,000 the year previous.
"Production of the crop in Canada in 2012-13 was expected to be lower than what it was the previous year, which could make the ending stocks forecast next July extremely tight if demand remains constant," Jubinville said.
However, he acknowledged that the demand picture remains tied to the ebb and flow of India’s demand for Canadian peas.
— Dwayne Klassen 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 July 31, 2012. Pre-report expectations are provided for comparison purposes. Figures are in millions of metric tons.
|Total stocks,||Total stocks,||Total stocks,|
|July 31, 2012:||July 31, 2012:||July 31, 2011:|
|All wheat||5.879||5.300 – 6.700||7.176|
|Durum||1.438||1.200 – 1.500||1.583|
|Canola||0.788||0.600 – 1.300||1.718|
|Barley||1.222||0.600 – 1.700||1.441|
|Oats||0.817||0.500 – 0.800||0.769|
|Flaxseed||0.141||0.100 – 0.250||0.194|
|Peas||0.276||0.100 – 0.350||0.535|