Canadian Wheat Stocks Top Expectations

Posted on 03/09/2017 10:19 AM

Statistics Canada this morning released its first grain stocks report of the 2016-17 marketing year -- Canadian grain stocks as of Dec. 31, drawn from a Jan. 3 to Jan. 15 survey of 8,559 Canadian farms. Trouble with this report is I have some problem accepting the numbers entirely at face value since there may be some discrepancies in knowing what "true" beginning supply is this season (carryin from last year plus 2016 production) given the nature of this year's challenging harvest.

In StatCan's final 2016 production estimates released at the start of December, there may have been some confusion amongst respondents of StatCan survey-takers on how to account for the larger than normal unharvested acres this year. The official StatCan position is growers needed to estimate crop already harvested when they got the call in early November and also add in estimated production from crop still left to be harvested. The debate is some growers did, while others may not have counted production potential from those unharvested acres. And of those that did include those unharvested acres in their overall production count, was the yield understated?

Then there is also the question of whether or not others count unharvested production on that previous report, but did not register that still unharvested grain as inventory for the purposes of this StatCan grain stocks report as of Dec 31.

With the uncertainty attached to these questions, could the grain stock numbers released today be somewhat skewed? Maybe yes, maybe no ... but for these reasons I'm not sure the trade is going to stack much credence in these numbers.

With that said, here's the number:

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As of December 31, 2016, StatCan says total stocks of wheat, corn for grain and barley were up compared with the same date a year earlier. However, total stocks of canola, soybean and oats were down in 2016. The following table is a recap of Statistics Canada's stocks report for the period ended December 31, 2016.

Total stocks of wheat rose 16.8% from December 31, 2015, to 25.0 million tonnes, which would be in the upper end of trade expectations. The gain in stocks reflected a 15.0% increase in wheat production in 2016. Stocks held on farm totaled 21.3 million tonnes, up 21.2% from December 31, 2015. Commercial stocks were 3.5% lower at 3.7 million tonnes.

What we do know is that domestic wheat inclusion into the official feed/waste/dockage category of usage in this report is higher given what we expected as strong use of wheat for feed, ethanol and just pure waste with this troubled harvested was higher than normal. However, overall grain consumption through animals may have been more reserved this fall/early winter given weaker feeding margins and late grazing. So there's a balancing act here.

Canola stocks were down 9.6% from December 31, 2015, to 12.2 million tonnes on December 31, 2016... about spot on with the median of trade expectation estimates. On-farm stock levels fell 12.3% to 10.3 million tonnes. Meanwhile, commercial stock levels rose 9.5% over the same period to a record high 1.8 million tonnes. Canola production was virtually unchanged from 2015 to 2016 at 18.4 million tonnes.

Total stocks of corn for grain totaled 11.7 million tonnes on December 31, 2016, up 3.0% from the same date a year earlier. Both on-farm stocks ( 2.2% to 8.8 million tonnes) and commercial stocks ( 5.4% to a record high 2.9 million tonnes) contributed to this increase.

Total stocks of soybeans decreased 4.3% from December 31, 2015, to 3.4 million tonnes in 2016 as result of a 17.1% decline in on-farm stocks. Meanwhile, commercial stock levels rose 16.4% over the same period to a record high 1.6 million tonnes. This overall decline was attributable to a drop in on-farm stocks from 2.2 million tonnes in 2015 to 1.8 million tonnes in 2016.

Barley stocks rose 11.7% from December 31, 2015, to 6.4 million tonnes at the end of 2016. No surprise here relative to pre-report trade estimates. The gain was attributable to a 12.6% increase in on-farm stocks to 6.1 million tonnes. Commercial stocks fell 9.1% to 211 000 tonnes.

Total stocks of oats decreased 5.3% to 2.4 million tonnes as of December 31, 2016. Here too, changes nothing from trade ideas going into this report. On-farm stocks were down 5.4% from the same date in 2015 to 2.2 million tonnes. Commercial stock levels declined 4.1% to 211 000 tonnes.

 

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