MarketsFarm — Statistics Canada’s grain stocks report leaves no question that canola stocks have been tight for some time in Canada and will continue to be unless demand is slashed, according to independent trader Jerry Klassen in Winnipeg.
“You can’t find canola anywhere in the country and the stocks that are out there, a lot of them are already spoken for,” Klassen said, noting there are very tight stocks as well for barley.
The federal agency on Friday issued its stocks of principal field crops for March 31, which pegged total canola stocks in the country at 6.57 million tonnes. That’s 37.7 per cent below the stocks at the same point last year, and 30.2 per cent under the five-year average.
“The canola number was below market expectations. We’ve seen some pretty good demand here in the first eight to nine months of the crop year. As we get closer to the end, the export demand will have to taper off.”
The tightness of barley stocks is in a very similar situation, Klassen said, calling them “historically tight.”
In the Statistics Canada report, total barley stocks were 2.81 million tonnes and 20.5 per cent less than a year ago. Also, current stocks were 21.6 per cent under the five-year average.
With that in mind, the trader said it’s imperative for barley usage to be reduced from now until July, which would require price rationing.
“To see another $50 to $80 [per tonne] jump in barley wouldn’t surprise me,” Klassen said.
“We need to see every feedlot in Western Canada switch over to wheat.”
Of wheat, Klassen thought it came off quite well in the report at 16.23 million tonnes, 13.6 per cent less than stocks a year ago. When compared to the five-year average, current stocks were down 4.5 per cent.
At 2.75 million tonnes, durum stocks were lower as well, slipping 16.7 per cent from a year ago, according to the federal agency. When compared to the five-year average, durum fell 21.8 per cent.
Unlike canola and barley, Klassen said the demand for durum has eased quite a bit with little threat of running out.
“Durum is going to resort to the feed market value,” he stated, noting red spring milling wheat is likely to follow along.