Comments on Agri-Food Canada’s Monthly Update

Monthly reports still are being issued by Agriculture and Agri-Food Canada (AAFC). In the April report, insights into the 2020/21 crop year were provided. Generally, the agency and FBN agree in directional change to key balance sheets. Statistics Canada’s acreage forecasts for 2020 are scheduled to be issued May 7.

Durum stocks forecast to stay tight

The agency sees production at 5.9 million tonnes on a 15 percent increase in planted area; FBN agrees with this direction. But, FBN expects stocks to be slightly tighter for 2020/21 compared with AAFC. Regardless, this is a balance sheet where opportunities will be present from a pricing perspective. Global durum stocks are tight heading into this crop year, and the U.S. is not expected to have an increase in production. This should keep interest in Canadian durum strong for the coming crop year. Canadian stocks are expected to be at their tightest level in over a decade by July 31, with the same situation expected by July 31, 2021. 

canada-durum-stocks

Non-durum wheat not as glamorous

Unfortunately, the outlook for non-durum wheat is not as friendly for producers. Both FBN and AAFC see stocks for the coming crop year to hit around 6.0 million tonnes. That would be the highest stocks total since the 2013/14 year and does not paint a rosy picture for price opportunities into 2020/21. Much of the price action in Minneapolis will be related to whether China buys spring wheat from Canada or the U.S. That business is down substantially this crop year, which is keeping a lid on strength in futures.

Canola stocks set to decline

AAFC is forecasting 2020/21 canola stocks at 2.7 million tonnes. That is based on planted area at 8.3 million hectares, production at 18.5 million tonnes, exports at 9.5 million and crush at 9.25 million. FBN agrees with this direction but is more optimistic about the use side of the balance sheet compared with AAFC. Even assuming that China remains mostly absent from the market, there is sentiment that stocks will move tighter into 2020/21.  

Other commodities

AAFC is forecasting barley stocks to remain burdensome and for prices to fall for 2020/21. Planted area for oats is forecast to be up by 9 percent and at its highest level in about a decade. With oat supplies expected to be up, year over year, for Canada and the U.S., the price outlook is not leaning positive for producers. AAFC sees lentil stocks contracting, which is in line with FBN’s opinion. Dry pea stocks are forecast to increase.      

What this means for the Canadian farmer

Generally, AAFC’s outlook is similar to FBN’s for commodities. The bright spots will be durum and lentils and potentially canola. Non-durum wheat, oats and barley do not have promising price outlooks for producers for the coming crop year.

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