Canada Markets

Statistics Canada will update its crop production estimates this week based on July surveys, while on the heels of perhaps one of the toughest weeks the organization has ever faced.

On Aug. 8, Stats Canada announced 200 new jobs were created in Canada in July, when economists had expected 20,000. Early last week, the organization announced an error had been made, with a revision to be announced Aug. 15. Later that week, the number was corrected to 42,000 jobs, instead of the original 200.

These numbers are perhaps the most watched numbers released by Statistics Canada, while having potential effects on the Canadian dollar trade, interest rates and the Canadian equity market. Perhaps not a good sign, Philip Cross, former Chief Economic Analyst for Statistics Canada, claims it's not due to cutbacks in the organization when telling CBC news "When Stats Can cut back ... they were made in things like agriculture statistics."

In 2013, the July production estimates were based on surveys with 15,000 producers over the July 24 to August 5 period. For the first time, the estimates did not address production in the smaller producing provinces such as the Maritime Provinces and British Columbia, which is estimated to produce between 2 and 4% of the country's total.

Over the past five years, on average, the July data has underestimated production when compared to the November production estimates released in early December for all of the selected crops except for barley, as seen on the attached chart. As seen on this chart, barley production has been reported to be 2% lower in December as compared to the earlier estimates reported in August. The final December estimates for barley were lower than reported in August in three out of the five years from 2009 to 2013.

The other eight crops selected, also seen on the attached chart, show the average December production numbers over the five year period exceeding the July numbers. On average, the July numbers tend to be conservative, whether intentional or not, for the majority of crops.

Over the five-year period between 2009 and 2013, December production estimates have averaged 2.4% above the July number for peas, 2.9% higher for winter wheat, 3.5% higher for oats, 7.4% higher for corn, 8.2% higher for soybeans, 8.5% higher for spring wheat, 9.8% higher for canola and 12.6% higher for durum.

Of the nine commodities charted, only three crops have been evaluated consistently lower in July as compared to the December report over the five years in question, a trend seen in winter wheat, corn and soybeans. The other six commodities all show years where the final data was reported either higher or lower than the July estimates over the five-year period.

Of the nine commodities selected, the highest accuracy is seen in the estimation of the winter wheat crop, with the December contract ranging from 1.7% higher than the July estimate in 2009 while ranging to 4.7% higher in 2013. Oats has perhaps posed the largest challenge in estimating as seen in the nine crops selected, with the December estimates ranging from 5.7% below July in 2009 while ranging to 33.7% higher than the July estimate in 2013.

Of the five years looked at, 2013 posed the largest swing in estimated production, with the combined nine commodities showing an average gain of 18% from the estimated production in July to the final estimated production figures released in December.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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