August 8, 2007

 

Canada's 2007/08 all-wheat output to drop by 12.3 percent; corn up by 26.8 percent

 

 

Canada's 2007/08 production for all wheat is forecast to decrease by 12.3 percent, to 22.1 million tonnes and durum production is forecast to increase to 4.4 million tonnes, according to a US Department of Agriculture attache report posted Tuesday on the Foreign Agricultural Services Web site.

 

Barley production for 2007/2008 is forecast at 12.0 million tonnes, a 25.4 percent increase from the previous year's level. The consequences of six months of preparing for an open barley market that will not happen will be played out in the coming crop year.

 

Corn production is expected to increase by 26.8 percent to 11.4 million tonnes, driven by higher prices and an increased demand from Canada's burgeoning ethanol industry.

 

Oats production is forecasted to increase by 9.0 percent to 4.2 million tonnes in 2007/2008, due to lower production costs, relative to other crops.

  

For 2007/2008, production for all wheat is forecast to decrease by 12.3 percent, falling from 25.3 million metric tonnes in 2006/2007 to 22.1 million tonnes in 2007/2008. For 2007/2008, production for durum is forecast to increase to 4.4 million tonnes however this increase is not expected to offset low carry-in stocks which result in total supply levels for 2007/2008 being 14.2 percent below those of crop year 2006/2007. This reduction in total wheat production is due in part to a shift from wheat to higher priced crops and lower fertilizer intensive crops (due to rising energy costs).

 

Barley production for 2007/2008 is forecasted at 12.0 million tonnes, a 25.4 percent increase from the previous year's level. The consequences of six months of preparing for an open barley market that will not happen will be played out in the coming crop year. Corn production is expected to increase by 26.8 percent to 11.4 million tonnes, driven by higher prices and an increased demand from Canada's burgeoning ethanol industry. Oats production is forecasted to increase by 9.0 percent to 4.2 million tonnes in 2007/2008, but lower prices may result in producers holding off for a return to higher prices resulting in increased stocks over the crop year.

  

Data from the June farm survey, Statistics Canada's largest areas survey, showed farmers reporting a significant 19 percent decrease in planting spring wheat, and a slight 2 percent decrease for winter wheat. The reduction in spring wheat is due, in part to higher prices for canola resulting from increased demand from the food processing industry and food retailers. While the planting intentions for durum suggested an increase of 27 percent over 2006/2007 seeding intentions, it is not enough to off-set the over all decrease in area seeded to wheat. For all wheat, farmers reported a seeding area decline of 11 percent from the previous years levels, likely due to rising fertilizer costs and a shift to higher-priced commodities such as canola.

 

For 2007/2008, wheat production is forecast to decrease by 12.3 percent, falling from 25.3 million tonnes in 2006/2007 to 22.1 million tonnes in 2007/2008. This forecasted decrease is due to the decline in seeded area. Wet spring delayed planting and prompted some farmers to switch from wheat to shorter season crops such as barley and oats. High prices for canola also shifted some production towards canola and away from wheat. Exports in 2007/2008 are expected to decrease by 21.9 percent as a result of lower supply and an increase in domestic demand for industrial purposes. Wheat for industrial purposes is expected to increase by nearly 6 percent. This increase is due to more Western wheat-based ethanol plants coming on-line as a result of the Canadian government's decision to put in place a bio-fuels strategy that includes a mandate for a 5 percent renewable fuel content in gasoline by 2010. While 2007/2008 total consumption levels may be slightly less than in 2006/2007, they account for a 5 percent greater share of the total supply. Stocks in crop year 2007/2008 are expected to decrease by 24.4 percent.

  

Planting intentions in the spring indicated a 27 percent increase in area being planted to durum due to higher expected returns relative to non-durum wheat and low stocks. For 2007/2008, production for durum is forecasted to increase to 4.4 million tonnes, representing a 30.1 percent over 2006/2007 levels of 3.3 million tonnes. However, this increase is not expected to off-set low carry-in stocks which result in total supply levels for 2007/2008 being 14.2 percent below those of crop year 2006/2007. Exports are expected to decrease by 11.7 percent from 4.3 million tonnes in 2006/2007 to 3.8 million metric tonnes in 2007/2008, despite a tightening of world wheat supply. This forecasted decrease is the result of the strong Canadian dollar which is off-setting bullish futures market prices which have reached new highs. Reduced supply is also expected to result in lower domestic consumption and low carry-out stocks.

  

On the other hand, planting intentions in the spring of 2007 showed that barley had increased by nearly 20 percent from that in 2006. This increase is due to seeding delays, higher prices, and possibly a renewed enthusiasm for barley with the April 2007 announcement of the Canadian government's intention to end the Canadian Wheat Board's single desk for barley on August 1, 2007.

 

Barley production for 2007/2008 is forecasted at 12 million tonnes, a 25.4 percent increase from the previous year's level. Despite this increase, total supply is forecasted to remain about the same due to low carry-in stocks and a slightly lower level of imports due to higher prices. Exports are expected to increase slight to 2 million tonnes, a 17.6 percent increase over the previous crop year. This increase may be in part due to some producers holding off on delivery in crop year 2006/2007 until August 1st 2007, the date after which it was expected that an open market for barley would exist. Domestic consumption is expected to increase slightly, due to a shift in feed consumption towards barley and away from corn due to the latter's higher prices. Stocks are expected to increase by 9 percent above the previous year's levels to 13.5 million tonnes.

  

On corn, survey results revealed that Canadian farmers planted 1.4 million hectares of grain corn and 245.5 thousand hectares of fodder corn in the 2007/2008 crop year, representing a 29 percent increase and 9 percent decrease, respectively, from 2006/2007 levels.

 

Crop year 2007/2008 forecasts corn production to increase by 26.8 percent to 11.4 million tonnes from 9 million tonnes in 2006/2007. This increase in production is driven by higher prices and an increased demand from Canada's burgeoning ethanol industry. Imports are forecasted to decrease by 23.8 percent to 1.6 million tonnes from 2.1 million metric tonnes in 2006/2007 due to the large crop, while exports are expected to remain relatively stable. Domestic consumption, fuelled mostly by the increased production of grain-based ethanol, is forecasted to increase by 11.6 percent from 2006/2007 levels to 12.6 million tonnes. Stocks are expected to increase by 12.4 percent.