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Canada crop stocks soar, but by less than expected

Canadian crop inventories swelled strongly last season, but did not build nearly as far as investors had thought, official data showed, sparking some rise in canola futures.

Canada's crop inventories, as of the end of July, the close of the marketing year in the country for most crops, "were up sharply… following bumper production for many crops" in 2013, Statistics Canada said.

Stocks of wheat jumped 94% to 9.80m tonnes, led by a more than tripling, to 6.1m tonnes in inventories on farm, with commercial stockpiles showing only a 9.9% increase.

For barley, overall inventories rose by 96% to 1.92m tonnes, while canola stocks quadrupled to 2.4m tonnes, again with most of the increase seen in on-farm stores.

'Supportive all around'

However, the data - drawn from a survey of 12,850 Canadian farmers, plus information from merchants, elevators, handlers and the Canadian Grain Commission – showed smaller increases in inventories than Canada's farm ministry had factored in.

Canada crop stocks, diff. from AAFC figure and (market forecast)

Wheat: 9.795m tonnes, -1.105m tonnes, (-905,000 tonnes)

Canola: 2.363m tonnes, -637,000 tonnes, (-637,000 tonnes)

Barley: 1.924m tonnes, -326,000 tonnes, (-276,000 tonnes)

Oats: 1.031m tonnes, -294,000 tonnes, (-169,000 tonnes)

Stocks as of July 31

And the increases were smaller than investors had expected too, by 900,000 tonnes in the case of wheat, more than 600,000 tonnes for canola, and nearly 300,000 tonnes for barley.

The data were "supportive all around" for price prospects, said Terry Reilly at Chicago broker Futures International.

Minneapolis-based Benson Quinn Commodities said that the data showed "a hint of friendliness", but said that "the potential supportive tone [for prices] could be trumped by Canadian wheat stocks being up 93% from the prior year".

The broker added that the data potentially indicate "better rail efficiency and good exports", after a winter marred by train hiccups stemming from unusually cold weather and competition with energy users for capacity.

Price reaction

The impact on wheat futures was actually muted, with the December contract in Minneapolis, North America's benchmark spring wheat market, standing at $6.12 ¾ a bushel one hour after the data, a gain of 0.8% on the day, but up only 0.5 cents from before the data report was released.

US Department of Agriculture data on US wheat export sales, released at the same time as the StatsCan report, came in at 169,000 tonnes, well below market expectations of a figure of at least 240,000 tonnes.

In Winnipeg, canola futures for November stood at Can$416.70 a tonne, a gain of 0.8% on the day, and up Can$2.70 since before the data.

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