February 6, 2009

Statistics Canada's grain and oilseed stocks report for the period ended December 31, 2008, held no surprises for the industry on Thursday (February 5).

 

Instead, the high stocks numbers were largely in line with trade expectations given high seeded acres and strong yields during the 2008-09 growing season.

 

Canola total stocks for 2008-09 were pegged by StatsCan at 9.143 million tonnes, up from 7.395 million tonnes in 2007-08.

 

All-wheat total stocks were reported at 21.859 million tonnes, compared with 16.116 million tonnes the previous year.

 

Barley total stocks for the current crop year were pegged at 8.500 million tonnes, up from 7.160 million tonnes in 2007-08.

 

The report's total stocks numbers were not surprising, said Keith Ferley, a commodities broker with Union Securities Ltd. in Winnipeg.

 

The numbers were big but the trade had expected them to be high and as a result there was virtually no response in the futures markets following the release of the report, Ferley said.

 

However, the report allows the trade to fine-tune their own supply-and-demand figures going forward, analysts said.

 

The interesting figure in the report is the total stocks number for canola, because demand has been so strong this year, said Ken Ball, also a commodities broker with Union Securities Ltd. in Winnipeg.

 

"The stocks are only roughly 1.75 million tonnes above last year and given that we came in with a large carry-in and then the size of the crop that we had, that number does not look really high to me," said Ball.

 

Also, one would expect the pace of usage and exports to outpace last year so the stocks gap should narrow through the rest of the year, added Ball.

 

Based on the numbers, 2008-09 canola ending stocks level could total around 2.2 million to 2.3 million tonnes, which "would be a pretty good performance to bring them down that low," Ball said.

 

Thursday's figures show that Canada has a very big job to do in terms of using up the large supply of canola, said Ron Frost, manager of AgProfit, the marketing division of Pike Management Group in Calgary.

 

"Some sporadic additional sales are not going to be enough to get down to a reasonable level carry-out number. We're going to need continuous additional sales to non-traditional markets," he said.

 

As for the pulse crops, Frost said the report's numbers reflect the problems the industry has had with broken contracts and credit issues in destination markets.

 

"It is pretty obvious that pulse export numbers are suffering and we have a big job to do in getting rid of some of the supply in those markets," he said.

 

Mike Jubinville, president and lead analyst for ProFarmer Canada, commented that while the December stocks numbers certainly were not bullish, they were more or less in line with market expectations.

 

Jubinville pointed out though, that total pea stocks were record large at 2.6 million tonnes as were total oat stocks at 3.267 million tonnes.