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Covid factors spur tumble in Canada's wheat stocks to 12-year low


Canada’s wheat inventories fell far more than had been expected - to a 12-year low - thanks to twin impacts from the Covid-19 pandemic, which freed up export capacity while boosting demand for food staples.


Canada’s wheat inventories ended 2019-20, in July, at 5.03m tonnes, down 860,000 tonnes year on year, Statistics Canada data showed.


That was 700,000 tonnes below market expectations and the country’s lowest wheat stocks figure since July 2008.


Exports of durum, the type of wheat used in making pasta and couscous, slumped by 63% year on year to just 659,800 tonnes - below the 900,000-tonne figure expected by investors, and the 800,000 tonnes at which Canada’s farm ministry, AAFC, pencilled in last week.


The durum figure was the lowest in 34 years.


Grains vs energy

StatsCan said that the shrinkage in durum stocks “can be explained by higher exports”, which rose by 18.3% year on year, “the result of higher global demand” after a weaker world harvest.


Indeed, the bureau highlighted that while Canadian ag transport was crimped earlier in the marketing year by competition with the oil and gas sector for the country’s restricted rail infrastructure, that changed after the pandemic sent energy demand tumbling.


“Reduced demand for petroleum and consumer goods as a result of the pandemic freed capacity to move more grain, and record amounts were shipped in the late spring and summer.”


This when food stockpiling prompted by Covid-19 was spurring orders for wheat, with the bureau highlighting “strong global demand” for Canada’s exports of the grain.


‘Higher demand from China’

For pulses too, StatsCan attributed steep falls in stocks – of 25% for dry field peas and 92% for lentils, to a 10-year low – to enlarged exports.


For peas a 17.2% increase in exports “was led by higher demand from China, which imported approximately 75% more dry peas year over year”.


For lentils, for which shipments gained 33% year on year, “exports to three of Canada’s largest markets - India, Turkey and the United Arab Emirates - all rose”.


‘Record crush’

The bureau highlighted too a recovery in canola shipments, of 10.5% year on year to 10.2m tonnes, “despite ongoing tariffs on canola exports to China, one of Canada’s largest export markets”, amid a diplomatic spat spurred by Canada’s arrest of a Huawei executive.


“Exports increased to a number of countries, including several in the European Union, as well as the United Arab Emirates.”


Even though the oilseed is processed largely for making biofuel, StatsCan noted too a “high domestic demand as Canada’s canola crushing hit a record-high 10.1m tonnes in 2020.


“This record canola crush was the result of high global demand for vegetable oils, combined with high canola supply and good crushing margins.”


Vegetable oil markets - while badly hit during the peak of lockdowns, which also sank demand from foodservice, another big user – have recovered markedly since, and proved strong ahead of the pandemic.


StatsCan pegged Canada’s canola stocks at the close of 2019-20 at 2.74m tonnes, down 34% year on year, although above the 2.3m-tonne figure expected by investors.

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