Statistics Canada’s November production estimates are the last crop report of the year but not the last word on the size of the crop.
Canada’s place as the world’s largest exporter of canola means the numbers on that oilseed are always closely watched for their impact on the markets.
This year, based on the interviews with farmers that form the basis of the report, the canola production number was pegged at 13.31 million tonnes, down from the September estimate of 13.359 million tonnes.
The number was within the range of analysts’ pre-report forecasts but near the bottom of the range. Canola futures jumped a little higher following the report.
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The November report gave substance to the opinion that the September report didn’t catch the damage caused by the terrible wind storms that blew swaths around at harvest time.
At first glance, the decline of 49,000 tonnes from the September production report reinforces the belief that canola stocks by the end of the crop year will likely be in short supply.
However, you also have to look at what Statistics Canada did to the 2011 canola crop number.
You see, the final November crop production report isn’t really the final number.
It is the best information available based on interviews with farmers and satellite monitoring data.
However, Statistics Canada also keeps track of exports and domestic use and issues stocks reports three times a year.
From that it can sometimes be deduced that the amount consumed is greater than the amount produced, which can’t happen, so the original production number must have been wrong. Statistics Canada then revises its production number.
In November of last year, the agency pegged the canola crop at 14.165 million tonnes, but in the September production report this year it revised it upward to 14.493 million tonnes.
And in this latest report, it increased it again, by 115,000 tonnes to 14.608 million. It also tweaked the 2010 crop higher, increasing it 16,000 tonnes to 12.789 million tonnes.
That probably means the carry-in to 2012-13 was larger than had been assumed when Agriculture Canada did its supply, demand and carryout forecasts.
So while the production estimate was trimmed, the carry-in is probably a little larger, which means the total available canola supply for this crop year is probably little changed and therefore has little real impact on prices.
As for other crops, Statistics Canada increased its estimate of the spring wheat, durum, rye, pea and lentil crops and decreased its estimate of the barley, oats and flax crops.
The changes had little effect on markets for the major grains, but the increases in peas and lentils put downward pressure on prices, especially for green lentils and yellow peas because they accounted for the increases.
Luckily, growers are in a strong position with good revenue from other crops and they can ration sales so as not to overload the system.
