Reuters / Canadian canola supplies dropped to a six-year low as of Dec. 31, highlighting a disappointing crop and strong demand for oilseeds, while wheat stocks were surprisingly lower, according to a Statistics Canada report Feb. 5
Canola supplies on farms and in commercial storage plunged 24 per cent to 7.37 million tonnes, while all-wheat stocks eased 0.7 per cent to 20.69 million tonnes.
StatsCan’s canola and all-wheat estimates fell within a range of trade guesses, however the industry was on average expecting to see higher, not lower year-over-year wheat stocks. The sharp drop in canola supplies would appear to debunk some industry thoughts that last year’s disappointing harvest was actually larger than StatsCan’s official numbers showed, said Chuck Penner, analyst at LeftField Commodity Research.
“Maybe that tightness in the canola market is real, so that will keep basis levels and (price) spreads very narrow,” he said. ICE Canada March canola futures were up modestly in early trading, shrugging off spillover pressure from weaker soybeans.
Canada is the world’s biggest canola producer and exporter, and usually the third- or fourth-largest wheat exporter.
With tight canola supplies, handlers and crushers are currently paying farmers between $10 and $30 per tonne over the nearby futures price, said Wayne Palmer, senior market analyst for Agri-Trend Marketing.
Even so, farmers are likely to plant this spring less of the yellow-flowering crop, which mainly produces vegetable oil, because of frustration over last year’s harvest and larger profit margins on wheat, Palmer said on a conference call hosted by Minneapolis Grain Exchange.
Wheat stocks were also drained by strong demand for domestic livestock feed, Penner said.
Oat stocks fell 20 per cent to 1.87 million tonnes, while barley supplies dropped seven per cent to 5.09 million tonnes. Stocks of both crops were well below expectations.
The skimpy oat supplies were due in part to higher use of oats as feed on farms and point to tighter stocks at the end of the 2012-13 crop-marketing year on July 31, said analyst Randy Strychar of Oatinformation.com.