June 9, 2011

 

Canadian grain stocks downgraded to record low

 

 

The slow pace of spring sowings in Canada has dashed hopes of a rebuild in the country's inventories of grains and oilseeds, leaving them on course to fall below 10 million tonnes for the first time in recorded history.

 

Canada's farm ministry, AAFC, slashed nearly 900,000 tonnes from its forecast for total inventories of the likes of barley, rapeseed, and wheat at the close of 2011-12, reducing the estimate to 9.46 million tonnes.

 

The downgrade takes stocks below the 10.36 million tonnes expected at the close of this season, to a "new record low level, 26% below the 10-year average", the ministry said, blaming the revision on a second successive season of wet spring sowing weather.

 

"Seeding progress in parts of Saskatchewan and Manitoba is currently well behind schedule due to very wet soil conditions," AAFC said. "A significant portion of the area which was intended to be seeded, may not be seeded or harvested."

 

The data follows a day after the Canadian Wheat Board estimated spring sowings on the Prairies, the country's main farming area, at 80% complete, compared with an average of 94% by now, and only two points ahead of last year when wet weather prompted huge abandonment rates.

 

AAFC said that the poor conditions had this time spread into eastern Canada too, causing "some seeding delays".

 

The ministry cut by 800,000 hectares, to 23.8 million hectares, its estimate for the harvested grain area this time, although a figure 2.6 million hectares higher than last year.

 

Even so, with domestic demand growing apace, notably for rapeseed following the opening of fresh crush capacity, output looked set, again, to fall short of demand.

 

Rapeseed and wheat, Canada's two main crops, bore brunt of the downgrade. The estimate for wheat area, as harvested, was cut by more than 300,000 hectares, leading a 700,000-tonne downgrade, to 25.5 million tonnes, in the ministry's estimate for production.

 

The USDA, which will on Thursday (Jun 9) reveal updated crop estimates, currently forecasts Canada's wheat crop at 26 million tonnes.

 

Rapeseed area was cut by a similar amount, leading to a forecast of a 12.7-million-tonne crop, 600,000 tonnes below last month's forecast.

 

In the report, AAFC had also cut estimates for world wheat harvests, downgrading their harvest hopes by nine million tonnes to 663 million tonnes, following setbacks to crops in Europe and the US.

 

The estimate for world year-end stocks was reduced by six million tonnes to 177 million tonnes.

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