Canada’s canola output got a bigger-than-expected late-season boost from good weather while wheat crops recovered modestly, Statistics Canada’s final report on the 2010 crop showed last Friday.
Too much rain across most of the Prairies, cool weather and untimely frost reduced quality and production potential, but many crops finished well in warm, dry October weather.
Statistics Canada’s canola estimate landed six per cent higher than the average trade view and at the top end of analysts’ range of estimates in a Reuters survey.
“What this number says is canola has probably defined its upside (price) potential,” said Jerry Klassen, manager of GAP SA Grains and Produits in Winnipeg.
ICE Canada canola futures turned negative after the report but later shrugged it off and moved higher.
Canada’s canola and wheat crops are still its smallest in three years.
“There’s not a flood of canola on the market, it’s just not going to be as tight as it was before,” said Chuck Penner, analyst at LeftField Commodity Research.
StatsCan raised its canola crop estimate by 14 per cent to roughly 11.9 million tonnes from its previous, early-October projection of 10.4 million tonnes, exceeding trade expectations for 11.2 million tonnes.
Although wheat did not recover as much, StatsCan raised its estimate by nearly one million tonnes, or four per cent, offering a mild surprise to the trade, which had expected an increase of less than one per cent.
WHEAT ESTIMATE RISES
The all-wheat number included a six per cent increase in StatsCan’s spring wheat estimate to roughly 17.5 million tonnes. StatsCan increased the all-wheat crop estimate to roughly 23.2 million tonnes from 22.2 million tonnes and kept its oat production estimate around 2.3 million tonnes.
The oat crop is Canada’s smallest in 19 years.
Bad weather has boosted Canada’s feed wheat supplies to a six-year high, but they are somewhat offset by StatsCan boosting its corn estimate by eight per cent and lowering its barley view by the same percentage.
“It’s extremely tight from the barley side but because of the feed grain production from the other crops, it’s not as large an issue,” said Bruce Burnett, the Canadian Wheat Board’s director of weather and market analysis.
Low output of flax, a crop that doesn’t like wet conditions, should push cash prices to new highs, Penner said.
StatsCan pegged the flax harvest at 423,000 tonnes, down more than 50 per cent from a year ago and about 15 per cent smaller than the trade expected.