Canadian wheat stocks much smaller than expected

As of Dec. 31, Statistics Canada (StatsCan) estimated Canadian stocks of wheat, canola, barley, oats and soybeans were all well below year-ago levels. That was no real surprise considering 2021 crop production was severely curtailed because of poor growing conditions last summer in Western Canada.

However, Canadian all wheat stocks at 15.6 MMT were much lower than the average pre-report estimate of 17.3 MMT. Wheat stocks plunged 38.0% from the previous year and were 37.5% below the 2016-2020 average. Mike Jubinville of MarketsFarm says, “It’s difficult to completely ascertain an explanation to this wide stocks gap, but it might suggest smaller 2021 wheat production than is currently projected by StatCan.”

Canola stocks were estimated at 7.6 MMT, which was in line with trade ideas, but the lowest level for this date since 2007. Canola stocks plummeted 43.1% from Dec. 31, 2020 and were 47.6% below the five-year average. Jubinville says, “This creates an untenable situation for canola given the current pace of usage via domestic crush and export. If use continues at the current rate through to the end of the marketing year, it would imply ‘negative’ canola marketing year ending stocks. That obviously cannot happen... so the process of rationing demand is not yet complete, even at these high prices.”