While most observers read and then discounted Statistics Canada’s ending stocks report because it contained few surprises, one market analyst savoured the document for a bit.
“I guess in some way Stats Can has vindicated my position,” said special crops analyst Brian Clancey.
Crop traders took Clancey to task earlier this year at the Canadian Special Crops Association annual meeting. They felt his lentil 2004-05 carry-in number of 49,000 tonnes was way out of whack.
During his lentil outlook presentation, Greg Simpson, owner of Simpson Seeds Inc., said the real number was closer to 10,000 tonnes.
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“I’ve never seen inventory so low in Saskatchewan,” said the owner of one of Canada’s largest lentil exporters.
“The bins are swept out, farmers have cleaned up, the trade has shipped out. There’s virtually hardly any inventories out there.”
Simpson asked the large audience of processors and exporters if anybody was holding onto a stockpile of lentils. Nobody raised a hand.
But according to the federal government’s statistics agency, there was slightly more than 38,000 tonnes of lentils on hand at the end of July, the exact time of year Simpson was telling his fellow traders nothing was out there.
“This completely contradicts what was said,” noted Clancey, who is the editor of the Stat Publishing markets newsletter.
Simpson stands by the comments he made earlier this year. He doesn’t understand where the federal statistician came up with its tonnes, surmising that the people interviewed in the survey must have guessed wrong.
“It just goes to show how unreliable Stats Canada is,” said the crop trader.
Clancey pointed out that while Simpson’s lentil number was a guess, the Statistics Canada estimate comes from a survey of 17,500 farmers between July 21 and Aug. 4.
The agency also polled handlers of special crops who were found to have 18,000 tonnes of lentils on hand.
He believes the amount on farms could even be higher due to intentional misrepresentation by growers.
“If anything, farmers are going to understate what they’ve got,” said Clancey, who has been following the special crops industry for 25 years.
“Farmers never lie high, they lie low.”
At the CSCA convention, Simpson said it would make no sense for processors or farmers to sit on a stockpile of lentils with a huge new crop looming on the horizon.
But Clancey said it’s a mistake to infer that just because farmers aren’t selling, their bins are empty.
“Every farmer who wouldn’t sell is now sitting there looking pretty dang smart,” he said.
Using Statistics Canada’s carry-in figure, Clancey has generated a new estimate for the trade to debate. He expects 90,000 tonnes of lentil carry-out for the 2004-05 crop year.
“However, the quality of residual supplies is expected to be poor, with the result that Canada is unlikely to feel it has a burdensome supply of lentils suitable for human consumption markets,” said the analyst.
While he agrees with the lentil estimate, Clancey took issue with Statistics Canada’s canaryseed 2003-04 year-end stocks estimate of 67,000 tonnes.
He thinks a more realistic number is 45,000 tonnes based on last year’s sales.
He said the agency has difficulty pegging crops like canaryseed and mustard because they are grown in concentrated areas while the survey is geographically dispersed.
Analysts at CGF Brokerage and Consulting agree the canaryseed number appears odd.
“If this number is accurate, that represents approximately one-third of the supply needed to satisfy the market for the 2004-05 crop year,” said the company in its weekly newsletter.
