Statistics Canada startled the markets with its recent comprehensive summary of what prairie farmers grew in 2001, finding more canola and other crops than it had expected in October.
While the report sent a brief shudder through the canola market, analysts say it won’t have any major long-term impact on prices.
“The increases from their September estimates were only small percentages, so it really didn’t seem to change the picture at all,” said Brenda Tjaden Lepp, a George Morris Centre grain market analyst.
Mike Jubinville of Pro Farmer Canada said the increases in crops like canola and barley were well out of line with what the trade expected.
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“In the country, there are some people scratching their heads, not sure if they believe this thing, but by the same token it’s the most comprehensive of Statistics Canada’s surveys,” he said. “It’s as accurate a number as we’re going to get.”
Overall, the bigger crops found by Statistics Canada should drag only slightly on the market.
The biggest impact is likely to be on canola. Statistics Canada estimated the crop to be almost 5.1 million tonnes, compared to the October estimate of less than 4.8 million tonnes.
The day after the Dec. 5 report was released, canola prices on the Winnipeg Commodity Exchange slumped. Jubinville said the Statistics Canada report wasn’t the only negative influence on canola, but “it created some momentum that knocked the market down that particular day.”
He thinks the new-found stocks will lead to weaker short-term prices, as extra canola seeks out poorer buyers.
“At some point we’re going to have to get a price level that’s going to attract that interest,” said Jubinville.
Budget-minded buyers such as the Mexicans and Chinese will come back only if prices are to their liking.
“Maybe we’ll have a correction a bit lower until we satisfy some of that demand.”
But the medium and long terms for canola are much better. The report did not challenge the idea that canola stocks will be low by the end of the crop year, and that’s great news for the price outlook, Jubinville said.
“Ultimately our stocks of canola are going to be just as tight,” he said.
The same goes for the barley crop, which Statistics Canada found to be about 240,000 tonnes larger than the 11.1 million tonne crop it estimated in October.
Barley is in short supply on the Prairies, and this new estimate won’t change that, analysts said.
Special crops were generally close to trade estimations, so they did not shake up the market.
“There were no particular surprises,” said special crops market analyst Brian Clancy of Stat Market Research.
“It reinforced what the markets already believed, and that’s relatively high (prices for most special crops).”
The report found smaller than expected mustard, lentil and canaryseed crops, while dry beans were at expected levels and field pea levels were slightly larger than expected.
Clancy said the brief flurry of trading sometimes seen right after a report like this isn’t always a sign of people panicking, but often reveals slight changes in the market that trigger electronic buys and sells that exaggerate the impact.
Tjaden Lepp said the grain trade now has the best estimate possible of the 2001 prairie crop, so all eyes will be on foreign crops and spring seeding intentions.
“Everyone now turns their attention to the 02-03 crop year,” she said.
