StatsCan report shows larger-than-expected canola stocks

The grain and oilseed stocks in all positions report released by Statistics Canada on Wednesday confirmed larger-than-expected supplies for canola and all wheat and suggests the agency underestimated the sizes of those crops during the 2010-11 season, industry sources said.

Statistics Canada pegged Canadian canola stocks as of July 31, in the 2010-11 crop year (on farm and in commercial position) at 1.828 million tonnes. Pre-report projections had expected canola stocks to be within 700,000 to 1.3 million tonnes. Supplies of canola in Canada at the end of the 2009-10 crop year totalled 2.263 million tonnes.

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“The canola stocks level was definitely a lot higher than what the industry had been expecting and is an indication that last year’s production estimate was way too small,” said Ron Frost, a grain and oilseed analyst with Frost Forecast Consulting of Calgary.

Ken Ball, a broker with Union Securities in Winnipeg agreed that the government agency underestimated last year’s canola crop by at least a million tonnes.

“That’s a huge discrepancy,” he said.

The crop production forecast from Statistics Canada will likely be corrected in updated government surveys in either October or December, said Mike Jubinville, an analyst with ProFarmer Canada.

“There’s a certain amount of a ‘fudge factor’ in the feed, waste and dockage numbers provided in separate tables provided by the agency, but this borders on the ridiculous,” Jubinville said.

Statistics Canada pegged all wheat supplies at the end of the 2010-11 crop year at 7.189 million tonnes. Pre-report ideas had projected supplies of all wheat in Canada to range from 5.5 million to 6.8 million tonnes. Supplies of all wheat at the end of the 2009-10 season totalled 7.829 million tonnes.

The estimate for all wheat was also on the high side of pre-report expectations and again it appears that the year-ago production forecast was understated, Frost said.

Jubinville agreed that supplies of Canadian wheat are higher than anticipated, but most of those supplies will be of low quality due to the poor growing season in 2009-10.

“It was definitely a challenging year for the Canadian Wheat Board to move the lower-quality wheat crop and may explain to some degree why supplies of the crop are larger than expected,” Ball said.

The government agency pegged Canadian barley stocks as of July 31 at 1.441 million tonnes, which compares with pre-report ideas that ranged from one million to 1.5 million tons. At the end of the 2009-10 crop year, barley stocks totalled 2.583 million tonnes.

While the barley supply figures were above pre-report ideas, the number is still at a historically tight level, Jubinville and Ball both agreed.

The oat supply estimate of 768,000 tonnes was also within pre-report expectations that ranged from 400,000 to one million. At the end of the 2009-10 crop year, oat stocks in Canada totalled 1.170 million tonnes.

“The oat estimate provides a bit of a cushion for end-users, but is still considered to be on the tight side,” Jubinville said.

Grain and oilseed stocks in all positions report as of July 31, 2011, in thousands of tonnes. Source: Statistics Canada.

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