Conservative StatsCan production estimates downplayed

CNS Canada — Statistics Canada’s updated production estimates came in Friday at the low end of pre-report trade expectations — but the timing of the survey had most industry watchers second-guessing the numbers as soon as they came out.

StatsCan pegged 2014-15 canola production at 14.079 million tonnes, up slightly from the 13.908 million tonnes forecast in August, but well below average trade guesses closer to 14.5 million. Canada grew a record 17.966 million-tonne canola crop in 2013-14.

Given the projected demand, the smaller-than-expected canola production would see carryout come in below one million tonnes by the end of July 2015, said Mike Jubinville of ProFarmer Canada in Winnipeg. Anything below a million tonnes is considered tight, and the canola futures did see an initial move higher in reaction to the report.

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However, StatsCan’s survey was conducted in early September, when little harvest activity had occurred — and anecdotal reports over the past month have shown better-than-expected yields in many cases.

The market is still generally anticipating a larger crop. “We’ll see upward revisions going forward, and won’t trade this at face value,” said Jon Driedger of FarmLink Marketing Solutions.

“It’s not indicative of the actual production, but it does point to the trend,” said Wayne Palmer of Agri-Trend Marketing on the September report.

While many crops saw slight increases from the last report or were relatively unchanged, durum was one commodity that saw a notable decrease.

StatsCan now forecasts Canada’s durum crop at 4.756 million tonnes, in line with trade guesses but below the 4.953 million tonnes predicted in August and well off the 6.505 million grown the previous year.

“Durum looks especially tight (and) is probably the most bullish of all the numbers, especially if you have high quality,” said Jubinville.

All-wheat production, which includes durum, was pegged at 27.481 million tonnes by StatsCan, which was below trade estimates and the previous forecast of 27.701 million tonnes.

After 37.53 million tonnes of wheat last year the Canadian crop is considerably smaller, but Jubinville said the latest number won’t change the broader market perspective on wheat.

Quality issues and spread relationships between grades and protein levels will be important to watch going forward, he said.

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

Table: Statistics Canada’s Canadian crop production estimates, released Oct. 3, 2014, compared to StatsCan’s Aug. 21 forecast, pre-report trade predictions and 2013-14 production levels. In millions of metric tonnes.

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