Canada Markets

AAFC Tweaks Old and New-Crop Forecasts

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Agriculture and Agri-Food Canada's monthly supply and demand tables included a small increase in grain imports combined with a reduced outlook for exports to result in a slightly higher ending stocks of 11.070 million metric tons for 2014/15 (grains and oilseeds only, excluding pulse and special crops), up from last month's 10.920 mmt. New crop estimates saw ending stocks fall to 8.725 mmt from last month's 8.825 mmt, with a decrease in 2015 grain and oilseed production and increase in exports offsetting increased carry-in stocks and reduced estimate for domestic use.

The 2014/15 wheat exports were reduced by 200,000 metric tonnes to 18 mmt from last month, an expected move, which increased ending stocks by the same amount to 5.2 mmt. Despite the cut in expected exports, the year-to-date volume of 10.069 mmt exported as of week 32 (licensed exports only) remains 1 mmt behind the cumulative pace required to meet the revised target. As of December, 409,000 mt of unlicensed exports were reported by the Canadian Grain Commission which will increase over time and narrow the gap.

AAFC also reduced its estimate of new crop wheat acres, with an expected reduction of .6% from 2014 to 19.3 million acres of wheat (except durum) from the 19.4 ma seeded in 2014. The February estimate indicated the possibility of a .4% increase in acres to 19.5 ma. Ending stocks for 2015/16 are left unchanged at 3.6 mmt due in the increased carry-in, a level which would be the lowest since July 2008.

The old-crop durum tables were left unchanged, while the potential remains for a hike in exported volume. At 3.36 mmt exported to the end of week 32, exports are 346,000 mt ahead of the cumulative volume needed to reach the current 4.9 mmt export target, which could eventually lead to a reduction in 2014/15 carryout and the 2015/16 carry-in. AAFC did temper its outlook for new-crop durum acres, with an 11.3% increase over the 2014 acreage resulting in 5.29 ma, up from last year's 4.75 ma but below the 5.5 ma expected last month. Ending stocks were reduced by 200,000 mt from last month to 800,000 mt for 2015/16, which would be the lowest level since July 1998.

AAFC lifted expected barley exports by 200,000 mt to 2.350 mmt for the current crop year, resulting in a reduced 2014/15 carryout of 650,000 mt this crop year, down 66% from 2013/14 and a record low for this crop. While current year-to-date exports total 882,900 mt as of week 32 which is 25% higher than year ago volumes, this volume seems well behind the cumulative volume needed to reach this new target. 2015/16 ending stocks are reduced by 100,000 mt to a record low of 500,000 mt, given a tighter carry-in and a reduction in 2015/16 exports.

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This month's corn data saw a reversal in flow of corn across the border, with imports increased 50,000 mt from last month along with a decrease of 150,000 mt in exports to result in a 1.5 mmt ending stocks figure, 200,000 mt higher than last month while also bumping up next year's ending stocks by 200,000 mt to 1 mmt.

Canada's oat ending stocks were reduced by 50,000 mt to 825,000 mt, based on a similar increase in current year exports, with the five-year average at 847,400 mt.

Current crop year estimates for canola were left unchanged which seems unusual, with the USDA and AAFC some 600,000 mt apart in the estimate for Canadian canola exports and carryout for this crop year. Current year-to-date exports of 4.946 mmt as of week 32 are over 700,000 mt below the cumulative volume needed to reach the current AAFC export target of 9.2 mmt, while weekly volumes export over the last four weeks have averaged 100,700 mt, less than half the necessary volume needed to stay on track to meet the current target.

No changes were noted in the special crop tables.


DTN 360 Poll

The latest DTN 360 Poll asked what the optimal exchange rate was in order to achieve optimal financial health for the respondent's operation. The majority or 43% suggested that an exchange rate of above $.90 CAD/USD was best, 27% answered that a range between $.80 and $.90 was best and 28% viewed exchange below $.80 being best for their operation. Two percent suggested they were unsure.

Results were split between Canada's regions, with 58% of Ontario respondents and all of Quebec respondents indicating a rate below $.80 CAD/USD is best while 45% of the Manitoba respondents, 55% of Alberta respondents and 56% of Saskatchewan respondents felt that a rate above $.90 was best for their operations.

This week's poll focuses whether Bill C-30 has achieved its intended results in the past year. Thanks to all who have responded in the past and please take the time to share your thoughts on the weekly poll found on your DTN Home Page.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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