Canada’s tightening canola stocks confirmed

Confirmation of Canada’s tightening canola supplies came from Statistics Canada in its updated stocks report released Tuesday.

With supplies as of Dec. 31, 2012 over two million tonnes tighter than they were at the same point the previous year, demand will need to be rationed going forward, which should keep canola prices well supported.

StatsCan pegged canola stocks as of Dec. 31 at 7.371 million tonnes, which compares with 9.646 million tonnes at the same time the previous year.

The number was in line with pre-report expectations, but "certainly points to the reason why companies have been paying huge premiums in the cash market to pull grain away from farmers," said Keith Ferley of RBC Dominion Securities.

"The combination of reduced production and strong export and domestic crush demand has created very tight canola supply implications," said analyst Mike Jubinville of ProFarmer Canada, noting the stocks number "suggests a pace of usage that is unsustainable for the remainder of the marketing year."

Ken Ball of PI Financial expected the crush pace would hold steady going forward, but said the big thing will be how much export interest backs away in the remainder of the crop year.

Stocks of most other crops were also down from year-ago levels, confirming the production issues that hurt yields across much of Western Canada in 2012, said Ferley.

All wheat stocks, at 20.69 million tonnes were seen as slightly supportive, coming in below average trade guesses and the 2011 level of 20.831 million.

Oats stocks were also a little supportive, coming in below trade guesses at 1.872 million tonnes, which compares with 2.333 million at the same point the previous year.

Barley stocks as of Dec. 31 were pegged at 5.088 million tonnes, which was in line with trade guesses but down from the 5.481 million in the country at the same point in 2011.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Table: A recap of Statistics Canada’s stocks report for the period ended Dec. 31, 2012. Pre-report expectations are provided for comparison purposes. Figures are in millions of metric tonnes.

  Total stocks, Total stocks, Total stocks,
  Dec. 31, 2012 Dec. 31, 2012 Dec. 31, 2011
  Actual Estimates Actual
All wheat 20.690 21.550 – 22.602 20.831
   Durum 3.830 3.650 – 3.894 3.995
Oats 1.872 2.054 – 2.585 2.333
Barley 5.088 4.650 – 5.325 5.481
Flaxseed 0.406 0.425 – 0.575 0.430
Canola 7.371 7.150 – 7.650 9.646
Soybeans 2.401 2.850 – 3.125 2.573

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