Canada’s canola output in the 2011/12 (Aug/Jul) crop year will be record large, but the estimate released by Statistics Canada in its first crop production survey fell below what market participants had been anticipating.
The government agency pegged Canada’s 2011/12 canola crop at a record 13.193 million tonnes, which was up from the 2010/11 level of 11.866 million. Pre-report ideas had called for canola output to be in the 13.142-million to 14.2-million tonne range.
“There is no doubt that the number fell at the low end of pre-report expectations and certainly had a bullish impact on canola values at ICE Futures Canada,” Ron Frost an analyst with the Frost Forecasting Corp. in Calgary, Alberta said. He said the trade had been expecting a higher yield base than what StatsCan used in calculating their production forecast.
Mike Jubinville, an analyst with ProFarmer Canada agreed the industry was definitely looking for a larger production estimate for canola than what the report revealed.
Jerry Klassen, manager at GAP SA Grains and Products in Winnipeg, also felt the report suggested that yield output of the various grain and oilseed crops are a bit lower than what had been anticipated. “Based on historic trends, Statistics Canada has had a tendency to raise their production estimates from the August report in their next report to be distributed in October. I don’t think that will be the case this year,” Klassen said.
He said there are concerns that heat and the absence of rain after the survey was taken may have reduced canola yields by a greater percentage than anticipated. All-wheat production in Canada in 2011/12 was projected by StatsCan at 24.076 million tonnes, which was up from the 23.167 million produced in 2010/11 and at the high end of pre- report guesses which ranged from 22.627 million to 24.805 million.
News of the estimate prompted a sell-off in the Minneapolis spring wheat futures, which ended down 24-1/4 cents at $9.26 in the spot September contract.
“The cereal grains in general have done much better than had been expected, given the late start to seeding and the extremely wet conditions at the start of the season,” Frost said.
Barley was one of the crops that has actually benefited the most from the wet start and the subsequent dryness that has followed, Frost said. Barley production in Canada in 2011/12 was pegged by Stats Canada at 8.274 tonnes. Pre-report estimates had called for output to range between 7.920 million and 8.200 million tonnes. In 2010/11, Canadian barley production was 7.605 million tonnes.
Jubinville said that while barley output may have come in at the high end of expectations, there should be no problem in absorbing some of the extra supply.
Oats production in Canada during 2011/12 was pegged at 2.886 million tons, up from the year ago level of 2.297 million and compares with pre-report ideas that ranged from 2.800 million to as high as 4.236 million. “The oat supply picture is definitely tighter than what the industry has been anticipating, and has already caused end-users to start ensuring they have stocks to work with,” Jubinville said.
The surprise of the report was the very low flaxseed production forecast, Jubinville said. StatsCan estimated 2011/12 Canadian flaxseed production at just 365,000 tonnes. This compares with last year’s output of 423,000 tons and pre-report expectations that ranged from 445,000 to 531,000 tonnes. Jubinville said with output that low, ending stocks will be at an extremely tight level.