Stats Canada report met with doubts
CRESTWOOD, Ky. -- The snowy conditions farmers faced in Canada had many worried significant crop loss and damage was coming. The needed break came for many to get out and finish up harvest activity, but questions remained heading into the Statist...
CRESTWOOD, Ky. - The snowy conditions farmers faced in Canada had many worried significant crop loss and damage was coming. The needed break came for many to get out and finish up harvest activity, but questions remained heading into the Statistics Canada report this week.
The report showed increased production of wheat and canola, surprising many in the agriculture industry, given the difficult fall. Adding to skepticism is the fact that farmers were surveyed during a time when crops were out in the cold and they were stuck inside wondering if a portion of their crops would even get harvested before winter.
Statistics Canada showed total wheat production up 15 percent from a year ago to 31.7 million metric tons. This is based on a yield jump to 42.8 bushels per acre on 7.3 percent less area harvested (of 21.9 million acres). Wheat prices in Chicago and Kansas City pushed to new lows two weeks ago. The Minneapolis market has held firm despite these lower markets, as demand for the higher protein wheat (both domestically and globally) remains strong. Russia's export market finally cooled after 10 consecutive weeks of higher prices.
Look for ongoing competition for wheat exports in the future. In the near term, expect Australia to be very aggressive, as weather during their growing season has been excellent across the country. Total production is forecasted to rise by 16 percent from a previous estimate to 32.64 million metric tons, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.
This will lead to a strong presence on the global wheat market in the coming months and it's important to note Australia is the fourth-largest exporter of wheat in the world. For a long-term impact, Ukraine-based agriculture company Kernel is planning a new Black Sea export terminal that has a 4-million-metric-ton capacity. While this new facility will not be ready until 2018, it does point toward Ukraine's ongoing presence and solidified focus on grain exports in the future. This year, however, competition might drive Ukraine's business down. Ukraine's Agriculture Minister Taras Kutovy announced exports could dip from the current forecast of 41 million metric tons, but likely not by more than one million.
Durum prices backed off a bit from last week. Spillover pressure from the dip in wheat markets helped take durum prices down.
Canola markets continued to follow the broader oil markets to some extent, but the majority of the focus was on the Statistics Canada report. Pre-report estimates ranged from 18 to 19.8 million metric tons for total production. The government's report showed 18.4 million metric tons produced, falling in the lower end of the expected range, yet still achieving a record output. Yields hit a record 42.3 bushels per acre but gains were offset by a 6.6 percent reduction in harvested acres to 19.2 million acres.
Peas and lentils
Statistics Canada's December crop report showed field pea harvest was 4 percent larger than the previous forecast in September. Lentil production was slightly lower than the last report, but still very large. In the end, 8.835 million metric tons of pulses were harvested compared to 6.423 million metric tons in 2015.
Note that 100 percent of the field pea crop and 97 percent of the lentil crop were harvested at the time of the farmer survey that the Statistics Canada report is based upon. This survey was conducted between Oct. 21 and Nov. 13. Even though October precipitation issues delayed some harvest activity in Canada, this data should be more reliable for pulses as most of the harvest work was done.
Mustard seed movement continues to be slow, but steady. The Canadian Grains Commission reported 1,200 metric tons of bulk mustard seed was loaded for export through licensed terminals. This keeps exports on pace with last year.