May 10, 2007

Tighter-than-expected Canada wheat, barley stocks draw attention

There were few surprises in the Statistics Canada grain stocks in all position report for the period ended March 31, with the exception of wheat and barley, market watchers said.

The figures for most of the crops generally were in line with pre-report expectations, they said. Wheat and barley stocks as of March 31 came in tighter than expected, and canola also came in at the lower end of pre-report estimated ranges.

Statistics Canada pegged all wheat supplies at 15.831 million tonnes, down from 18.727 million tonnes at the same time a year ago. Pre-report estimates had expected all wheat supplies to range from 17.6 million to 18.9 million tonnes.

Barley stocks as of March 31 totalled 4.551 million tonnes, down from the year ago level of 6.485 million tonnes and pre-report projections that ranged from 5.3 million to 6.2 million tonnes.

"The real question is whether usage of those two crops was a lot stronger than anticipated during the winter or whether end users bought supplies earlier than expected and were holding onto them," Ken Ball, a broker with Union Securities Ltd in Winnipeg, said.

He said end users of both barley and feed wheat may have been aggressive buyers earlier in the crop year rather than later in order to ensure that they had enough supplies to cover demand through to the spring.

"It's possible that some of these end users have been caught short of supply in previous years and took steps to avoid having to pay up to get those supplies from farmers this spring," Ball said.