Stats Canada’s final production report is viewed as bearish. It’s been rather common for Stats Can to underestimate production in its early season reports, but new data this morning exceeded expectations.
Wheat production is pegged at 30 MMTs, vs. 27 MMTs previously, and which suggests drought during most of the season had little effect on yields there. Wheat production of 30 MMTs is in fact just 5% below last year and the third highest on record. Domestic use may be a bit understated, but Canada’s exportable wheat surplus will grow by a like amount. Should exporters there choose to, Canada will be able to export upwards of 22.5-23.0 MMTs in 17/18, vs. just 20 MMTs last year. This will further weigh on US export potential, in spite of hi-pro supplies getting tight in Northern Europe.
New Canadian oilseed data is mixed, but still overall bearish, as a hike in Canola production will more than offset this morning’s downgrade to Canada’s soy harvest. Canola production was raised from 19.9 MMTs to 21.3 MMTs, a new record, and the extra supply will nearly erase concerns over falling end stocks. Soybean production was lowered to 7.7 MMTs, vs. 8.2 MMTs previously. Canada’s combined exportable surplus of canola & soy is now pegged at 17 MMTs, a full 1 MMT above the USDA’s current forecast. Either a new record in Canada’s canola exports will occur, or end stocks will rest at a much more comfortable 1.8-2.0 MMTs. Canola futures today fell moderately, canola’s premium to beans in US dollar terms has fallen to $25/MT, vs. $50/MT in early autumn.
Canadian feedgrain production was lowered slightly, but modest net exports are still probable. Canada’s corn crop is now pegged at 14.1 MMTs, down 700,000 MTs from previously; barley production was lowered 100,000 MTs to 7.9 MMTs (and vs. 8.8 MMTs last year); oats production was left unchanged at 3.7 MMTs. Canada’s exportable feedgrain surplus is displayed at left. Canada may even be a lite exporter of corn, perhaps by 500-800,00 MTs. World barley and oats balance sheets will stay rather tight until/unless acreage is found in 2018, but today’s Stats Can numbers have provided some short term relief. The worst case scenario, reduced barley & oats production, has been avoided.