An upward nudge in the crop production estimates Statistics Canada released Tuesday for canola and all wheat grown in Canada in 2011-12 was a bit bigger than expected, while the forecast for oats and barley suggests a tight supply situation.
The federal statistics agency pegged Canadian 2011-12 canola output at a record-sized 14.165 million tonnes. Pre-report estimates had called for canola production to be in the 13.5 million- to 14.4 million-tonne range.
The December estimate was also larger than the 12.928 million tonnes forecast in early October and compares with the 2010-11 level of 12.773 million.
"Anything over 14 million tons for canola should be bearish for prices, but because demand from both the domestic and export sectors has been so strong, the market has not been able to respond in any kind of downward motion," said Ken Ball, a broker with Union Securities in Winnipeg.
"I would call the demand from the export and domestic sectors ‘sensational’ and the main reason a record-large canola crop of over 14 million tonnes is not causing any major sell-off in value," said Mike Jubinville, an analyst with ProFarmer Canada.
All-wheat output in Canada during the 2011/12 season was pegged by Statistics Canada at 25.261 million tonnes. Pre-report ideas had expected the production survey to show output in the 24.2 million- to 25.2 million-tonne area. In early October, the agency forecast all wheat production at 24.16 million tonnes while in 2010-11 output totalled 23.167 million.
The weather conditions for both canola and wheat resulted in yields coming in above expectations, said Ron Frost with Frost Consulting in Calgary. The harvest weather for both crops were also obviously optimal, he said.
One of the surprises in the survey was the forecast for barley. Statistics Canada projected 2011-12 barley output at 7.756 million tonnes. Pre-report ideas had forecast barley production to be in the 7.91 million- to 8.4 million-tonne range.
In early October, the government agency had pegged barley production at 7.898 million tonnes and in 2010-11 barley output was 7.605 million.
The lower-than-anticipated barley production forecast was linked to both weather and acreage. "Barley must not have liked the late start to the growing season, which was a bit wetter than normal, which conversely had a negative impact on yield potential," Ball said.
Jubinville linked the smaller barley crop to farmers seeding less area to the crop than had been reported previously.
"Basic economics in the spring suggested that barley returns were not as good as other crops, and this kind of production estimate confirms this idea," Jubinville said.
The low production estimate for barley will result in a tighter-than-expected stocks scenario this spring, Frost pointed out.
Statistics Canada pegged Canada’s 2011-12 oats production at 2.997 million tonnes. Pre-report expectations had called for oats output to range from 2.082 million tonnes to 3.6 million. In early October, the government agency pegged oats production at 2.887 million tonnes while production in 2010-11 totalled 2.479 million tonnes.
The slightly larger-sized crop was not seen as being a burden on the supply base, and in fact will result in some tight ending stocks, both Frost and Jubinville said.
The following are Statistics Canada’s estimates and pre-report ideas for 2011-12 Canadian production, compared to 2010-11 data, in millions of tonnes.
|Canola||13.500 – 14.400||14.165||12.928||12.773|
|All wheat||24.200 – 25.200||25.261||24.160||23.167|
|Barley td>||7.910 – 8.400||7.756||7.898||7.605|
|Oats||2.082 – 3.600||2.997||2.887||2.479|
|Flaxseed||0.385 – 0.400||0.368||0.378||0.423|