WINNIPEG – The grain trade may have concerns about crop production this year given the late start to seeding, dry conditions and an onslaught of insects.
But Statistics Canada’s July 31 estimates predict average yields only marginally lower than last year, mostly because of the weather.
The report appears to bring bearish news for canola in the short term, estimating 444,500 tonnes less production in Western Canada than last year. But this number is higher than some in the trade expected.
“I think it caught a few people off guard,” said Rob Dzisiak, an analyst with Linnco Futures Group in Winnipeg, adding that although the market dropped on the news, skepticism about the canola numbers meant it didn’t fall as hard as it could have.
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Errol Anderson, an analyst with Palliser Commodities in Calgary, said the trade is taking the figures with a grain of salt. He said he’s heard too many reports of yield reduction due to Bertha army worms to put much stock in the Statistics Canada numbers.
However, Greg Kostal, an analyst with United Grain Growers, said the report is in line with what UGG predicted in a similar survey taken of its grain elevators recently. “What we’re seeing here is that the disaster areas are disasters, and the good areas are good. And when you average it out, it’s an average crop.”
Kostal added that today, an average canola yield is better than what it would have been five years ago because of higher-yielding cultivars.
Oats a surprise
While the Statistics Canada wheat figures seemed to be in line with trade expectations, the report held surprises for oats. Western Canada will produce 826,800 tonnes fewer oats than last year.
Dzisiak said this figure bodes well for prices. Given “the smallest U.S. crop in history” and fewer European exports, there may be more Canadian exports to the United States.
The report was also bullish for barley. Western Canada will increase its production by 732,700 tonnes over last year, which would be the largest crop since 1990.
The barley numbers were a little higher than what Dzisiak said he expected, but they were lower than what UGG predicted.
Anderson said while feed grains prices appear to be bullish right now, farmers shouldn’t put too much stock in the production numbers because they don’t reflect a shrinking market.
“The eastern Canadian market is basically shut down because of the loss of the Crow, and the wheat board doesn’t have much of a program right now in barley out there,” Anderson said.
“So particularly in Saskatchewan, all that barley has got to go to southern Alberta, and the economics of cattle feeding right now are terrible.”
The Prairies will also be producing a record flaxseed crop this year at more than 1.1 million tonnes. Dzisiak and Kostal said flax numbers were in line with their expectations.
But Anderson said production numbers may be too higher, particularly in Manitoba where conditions have been less than ideal.
