Canada's wheat stocks dropped further than expected to a five-year low, with canola inventories tumbling to their smallest since 1998, but the impact on markets was overshadowed by mounting hopes for this year's harvest.
Canada's wheat stocks as of end of July fell 14.8% to 5.06m tonnes, the lowest since 2008, led by a fall in commercial inventories, Statistics Canada said.
For canola, inventories dropped 14.0% to 608,100 tonnes, a decline again led by inventories held by merchants and consumers, with on-farm stocks actually rising by 19.0% to 200,000 tonnes.
The data were, on the face of it, supportive for prices, coming in short of market forecasts of 5.13m tonnes for wheat, of which Canada is expected to be the third-ranked exporter in 2013-14, and 730,000 tonnes for canola, of which the country is by a margin the top shipper.
Broker US Commodities termed the data "slightly positive", although another broker termed the statistics "not a big deal, since the new crop harvest is on the way".
Indeed, wheat futures in Chicago and Minneapolis stood little changed after the data, posting modest gains, while canola futures for November dropped 0.8% to Can$505.00 a tonne in Winnipeg, as market talk quickly reverted to the strong harvest results, including from the newly-started spring wheat harvest.
Spring wheat, as traded in Minneapolis, accounts for the vast majority of Canada's wheat harvest.
Farm officials in Saskatchewan, Canada's top grain growing province, reporting 5% of the spring wheat harvest completed, and 8% of canola, said that "above-average yields are being reported for most areas" from fields cleared so far.
At broker RJ O'Brien, Richard Feltes said: "Canada's wheat harvest is progressing rapidly, with better-than-expected wheat yields," a result which was "prompting an increase in private sector production estimates to 31.5m tonnes".
The US Department of Agriculture has forecast a 29.5m-tonne crop, with StatsCan estimating output at a 22-year high of 30.5m tonnes.
Canada vs US
Indeed, the results from the Canadian harvest are overshadowing those in the US where, although spring wheat yields are also coming in strong, protein levels have fallen, coming in at 13.9%, down from 14.6% last year, according to US Wheat Associates.
"It seems the Canadian producers have found pockets of better protein," said Brian Henry at Minneapolis-based broker Benson Quinn Commodities.
In the US, while yields were "very good… we continue to see wide ranging proteins, with the bias being lower than normal".