By Roberta Rampton –
WINNIPEG, Manitoba (Reuters) – Canadian grain traders suspected Statistics Canada would find bigger crop yields in its latest survey of farmers released on Wednesday, but they said they were surprised by just how large production was.
Despite a prolonged harvest delayed by snow and rain, and a jump in abandoned acres from earlier reports, Statscan increased production estimates for all major crops except flax.
Spring wheat yields were a record 38 bushels per acre, but crop quality was downgraded by cool summer temperatures, early frosts and the wet harvest, Statscan said.
“Quality is an important issue this year, and wheat grades for more than half the crop will not be grade No. 1 or No. 2,” Statscan said in its report.
Statscan said farmers produced a total of 25.86 million tonnes of all types of wheat, up from its Oct. 6 estimate of 24.462 million tonnes, and above the highest trade estimate of 25.4 million tonnes.
The bigger estimate does not significantly change the Canadian Wheat Board’s market outlook, analyst Dwayne Lee said.
“With the record (U.S.) corn crop out there, there’s lots of feedgrains around,” Lee said.
The CWB believes a third of the crop in Western Canada graded feed, and it expects to export up to 2 million tonnes in 2004/05 (Aug/July), its chief executive, Adrian Measner, said on Wednesday.
“More production just means that much more feed wheat,” said a feedgrain trader at the Winnipeg Commodity Exchange.
Durum production was 4.962 million tonnes, above the highest trade estimate of 4.9 million tonnes, and above Statscan’s Oct. 6 estimate of 4.671 million tonnes.
Barley production was pegged at 13.186 million tonnes, up 7 percent from Statscan’s earlier estimate and at the low end of trade estimates ahead of the report.
Oats were estimated at 3.683 million tonnes, slightly above the top end of trade estimates and 5.6 percent larger than Statscan’s Oct. 6 estimate.
Statscan said the flax crop was the smallest since 1992. It dropped its flax estimate to 517,000 tonnes, down 23 percent from its October figure.
CANOLA TRADERS EYE LARGER ENDING STOCKS
Statscan put canola production at 7.728 million tonnes, up 10 percent from its last survey result of 7.001 million tonnes.
Traders polled ahead of the report had thought Statscan would find 7.0 million to 7.9 million tonnes, although some said they believe actual canola production topped 8 million tonnes.
Many traders believe Statscan’s surveys tend to underestimate canola production.
Exports to Nov. 28 lagged year-earlier figures by 15 percent because of high ocean freight rates combined with farmers’ reluctance to sell their stocks at prices competitive with other world oilseeds, said Nolita Clyde, canola market analyst with Ag Commodity Research.
The domestic crush pace also appears to be slowing, Clyde said.
Canola ending stocks could rise to 1.7 million tonnes by July 31, up from 612,000 tonnes at the end of the 2003/04 marketing year and the highest stocks since 1999/2000, Clyde said.
The large Statscan increase pressured canola futures to fresh contract lows at the Winnipeg Commodity Exchange on Wednesday.
January canola dropped as low as C$2.90 ($2.35) per tonne to C$267.10 before gaining ground by midsession.
“We were having trouble finding a home for what Statscan told us the production was earlier, at 7 million tonnes,” said a canola trader at the exchange. ($1=$1.23 Canadian)
Source: Yahoo News