StatsCan Retains Its Bearish Title
Last year’s Canadian spring wheat crop came in at just under 20.5 million tonnes. This year, StatsCan had previously estimated 20.1 million tonnes of Canadian spring wheat in their September data and satellite-driven estimate. Even that was a solid jump from the August estimate of 18.9 million tonnes. However, it’s easy to point out that the August estimate comes during the growing season (thus, this upgrade is a reminder to gauge expectations after the August StatsCan report and take it with a grain of salt).
Ahead of report on Tuesday, December 6th, the market was expecting to see about 20.5 million tonnes of spring wheat. Instead StatsCan showed up with a whopping 22.2 million-tonne crop, which is 8% better than last year and 3% better than the five-year average of 21.6 million tonnes. From a yield standpoint, an average of 52 bushels per acre was harvested by the Canadian spring wheat farmer. That’s a 10% increase from the five-year average. Nonetheless, when you combine that yield with 16.6 million acres harvested, you can produce the best crop since the 2013 record of 27.3 million tonnes.
Comparably, Canadian durum wheat yield numbers are down big time in 2017/18. An average of 35.3 bushels per acre was harvested by the Canadian durum wheat farmer. That’s a 16% drop from the five-year average and a clear indication of the stress that a drier year can put on yields. Nonetheless, when you combine that yield with 5.16 million acres harvested, you are able to produce nearly 5 million tonnes. The market was expecting to see 4.6 million tonnes of durum, which would’ve been an upgrade from the 4.3 million tonne satellite & data-based estimate in September.
And finally, Statistics Canada says that farmers in the Great White North harvested a record canola crop this year. The market was expecting to see 20.2 million tonnes of canola, which would’ve been a solid upgrade from the 19.7 million tonne satellite & data-based estimate in September. Instead, Statistics Canada showed us 21.3 million tonnes, thanks to a 41 bushel-per-acre average yield and record 22.8 million acres harvested.
Ultimately, for canola prices, we’ll have to continue to monitor demand. The market is likely going to take at least 20.5 million tonnes out of this supply. Potentially it could be as high as 21.5 million tonnes. For durum and sprint wheat, it’s a similar story (watching demand), but exports will be a big factor. We also have a report coming out from the USDA later this month regarding the number of abandoned spring wheat and durum acres that could be supportive of a rally. Between this and monitoring Southern Hemisphere crop conditions, we will also look for new pricing opportunities on either currency or weather premium pops.
President & CEO | FarmLead.com