AStatistics Canada report last week said Canada’s wheat stockpiles at the end of the 2009-10 crop year were the largest in four years, rising 19 per cent and surprising traders who had expected thinner inventories at a time of global supply anxiety.
But overall spring wheat supplies don’t look abundant given harvest delays and slow growth of the new crop.
“Supplies still aren’t plentiful to export this year so it’s not like there’s going to be a sudden glut of wheat dumped on the market,” said Chuck Penner, owner of LeftField Commodity Research in Winnipeg.
Statistics Canada on Sept. 8 pegged all-wheat stocks at 7.82 million tonnes as of July 31, above trade expectations of 6.8 million tonnes amid ample supplies of durum wheat, Statscan said.
Durum wheat stocks swelled 42 per cent to 2.7 million tonnes, close to the average trade expectation of 2.8 million tonnes.
Stocks of wheat excluding durum, mainly spring wheat, rose 10 per cent to 5.113 million tonnes.
Larger-than-expected supplies of both non-durum wheat and canola may raise questions about the report’s accuracy, said Ken Ball, commodities futures and options broker at Union Securities in Winnipeg.
“I think eyebrows are going to go up,” he said, adding that big surprises are uncommon in Statscan’s end-of-year stocks report because exports from the year are well-defined.
Traders had expected a more modest increase in wheat stocks due to plentiful world supplies during most of the 2009-10 crop year.
Statscan estimated canola stocks at a near-record 2.123 million tonnes, a sharp 42 per cent higher than the average trade estimate of 1.5 million tonnes, and oat stockpiles at 1.17 million tonnes compared with the trade’s idea of one million tonnes.
The stocks report showed greater canola demand than supply in 2009-10, which Statscan balanced by attributing the difference to a category for crop supply reductions due to feed use, waste and dockage.
“It is a signal that we need to increase supply to balance out the S&D,” said Faye Price, crops analyst at Statscan. “To do this, we are having to make an adjustment to production to add more canola into total supply for (2009-10).”
Statscan will boost its 2009 production estimate of 11.8 million tonnes by at least 476,500 tonnes – the reported amount of feed, waste and dockage – with its Oct. 4 report, Price said.
Statscan’s canola stocks estimate “seemed awfully large” but isn’t too bearish considering ongoing harvesting delays in Western Canada, said Keith Ferley, a commodity trader for RBC Dominion Securities in Winnipeg.
“There’s a little more breathing room for commercials. I think the market’s breathing a sigh of relief.”
Old-crop oat stocks, down 23 per cent from last year’s record high, leave Canada on track for the second-lowest ending stocks on record from new crop year 2010- 11, said Randy Strychar, analyst at Oatinsight.com.
Barley stocks fell 9 per cent from a year ago to 2.583 million tonnes.
Statscan surveyed 14,400 farmers between July 26 and Aug. 3.
Statscan will update its production estimates on Oct. 4.
– KEN BALL, UNION SECURITIES