Situation report — October 2011

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Farmers expect to harvest higher volumes of wheat, canola, and barley

Western farmers anticipate increased production of canola, as well as higher volumes of barley and wheat compared to 2010 due to ideal mid-summer weather conditions. Farmers in Ontario and Quebec expect lower yields and a smaller crop of corn for grain in 2011, while Quebec farmers expect a record soybean production. These numbers originate from Statistics Canada's September Farm Survey of 14,100 Canadian farmers, which is a preliminary survey of field crop production in Canada. This survey was conducted from September 1 to September 9, 2011.

Total wheat production in the West is expected to reach 21.7 million metric tonnes in 2011, up 3.0% from 2010. This rise in production is mainly attributed to an increase in durum wheat, which is expected to increase 30.2%, on the strength of both higher harvested area and expected yield.

Western farmers expect canola to reach 12.8 million tonnes, up 1.1% from 2010 production as a result of a record harvested area of 17.9 million acres. Expected yield, on one hand, represented a decline of 4.8% from 2010. Of the four western provinces, only Manitoba expects its canola production to decline from 2010 levels. According to the Government of Manitoba, indications are that for the majority of crops, yield and production are projected to be down from 2010. This is due to excessive moisture, cool and wet weather that delayed seeding of most crops followed by dry mid-summer conditions in several areas of the province.

Even though barley harvested areas are expected to decline, Canadian farmers anticipate that increased yields will result in a 3.8% increase in production to reach 7.9 million metric tonnes. This increase is concentrated in Saskatchewan, where production is expected to reach 2.5 million tonnes in 2011, up from 1.9 million metric tonnes in 2010.

Canadian grain stocks at July 31^st, 2011

As of July 31^st, total stocks of wheat, barley, oats and canola decreased compared with the same date in 2010, according to Statistics Canada's survey of 15,200 Canadian farmers from July 25 to August 2, 2011. In this survey, farmers were asked to report the amounts of grains, oilseeds and special crops in on-farm storage. Data on commercial stocks of western major crops originate from the Canadian Grain Commission. Commercial stocks of corn and soybeans are estimated by Statistics Canada sample of grain elevators in Eastern Canada.

Total wheat stocks decreased 8.2% to 7.2 million tonnes, primarily due to a decline in on-farm stocks. Commercial stocks remained stable. A lot of this decline resulted from durum wheat stocks which dropped 41.5% over the year to 1.6 million metric tonnes.

Overall stocks of barley declined 44.2% to 1.4 million tonnes. This was related to the drop in production of barley in 2010. All four western provinces experienced reduced on-farm stocks, with the largest declines in Manitoba and Saskatchewan.

Total stocks of canola decreased 19.2% to 1.8 million metric tonnes, most due to on-farm stocks. Despite the 33.9% decline in on-farm stocks, total canola stocks remained at the five-year average (2006 to 2010) of 1.8 million metric tonnes.

Following a sharp decline in oat production in 2010, total oats' stocks fell 34.3% to 769,000 metric tonnes. On-farm stocks of oats were down 37.2% while commercial stocks fell 24.2%.

Total stocks of flaxseed and rye fell by 32.9% and 70.5%, respectively. Flaxseed registered at 194,000 metric tonnes while stocks of rye were at 41,000.

Similarly, the stocks level of both Canary and Sunflower seeds also decreased. Canary seed fell 51.9% to settle at 39,000 metric tonnes, while sunflower seed stocks dropped 31.0% to result in 29,000 metric tonnes.

On the other hand, overall stocks of lentils jumped to reach 750,000 tonnes from 45,000 in 2010. There was also an increase in total stocks of mustard seed (+56.3% to attain 125,000 metric tonnes) and chickpeas (+10.0% to reach 22,000 metric tonnes).

Wheat supplies projected to be higher in US and World, USDA reports

In the United States, lower expected demand and exports more than offset reduced production to result in raised wheat stock projections for 2011/2012, according to the United States Department of Agriculture (USDA). Wheat stocks in the US are expected to settle at 11.6% lower for October 2011/2012 from the previous year.

Global wheat supplies are projected to be higher with larger beginning stocks in Australia and higher production in Kazakhstan, Australia, EU-27, Canada, and South Africa, as projected by the USDA.

World beginning wheat stocks are forecasted to rise by 2.26 million metric tonnes to settle at 195.6 million metric tonnes. This gain is due to a 3.2 million metric tonne increase for Australia, which more than offsets numerous, small, downward revisions elsewhere. For Kazakhstan's production estimates are raised 3.0 million metric tonnes based on results verifying the impact of abundant moisture and ideal summer weather on this year's crop. Australia's wheat production is raised 1.0 million metric tonnes as September rainfall boosts wheat yield expectations. Production is raised 0.5 million metric tonnes for the EU-27 with further upward revisions for France and the Czech Republic and Hungary. For both Canada and South Africa, wheat output is increased by 0.2 million metric tonnes each.

World wheat trade is expected to increase for 2011/2012 due to higher expected imports for a number of countries and larger exports to support increased trade.

US contributes to higher levels of global coarse grain supplies

US feed grain (oats, barley, corn and rye) supplies for 2011/2012 are projected at higher levels as a result of beginning stocks more than offsetting lower forecast production.

Global coarse grain supplies for 2011/2012 are projected to be higher with a significant portion of the increase reflecting higher US corn beginning stocks.

Global corn production is projected to be higher, due to growth in foreign production offsetting the reduction in the US. Production is also expected to rise by 4.0 million metric tons in China to reach a record 182.0 million metric tonnes. Ukraine corn production is raised 3.0 million metric tonnes as summer precipitation and temperature patterns supported a sharp year-to-year-increase in yield prospects and early harvest results indicate record yields. Production is also projected to be raised 0.5 million metric tonnes for Russia but lowered 0.3 million metric tonnes for Serbia.

Due to expectations of higher corn imports by South Korea and higher corn exports from Ukraine and Russia, the global coarse grain trade forecast for 2011/2012 is slightly raised.

USDA forecasts soybeans to contract

U.S. oilseed production for 2011/2012 is projected at 91.6 million metric tonnes, down from the previous month, down 0.8 million metric tonnes from the previous month.

Soybean production in the US is forecast to be 25 million bushels lower, at 3.06 billion bushels, due to lower harvested area and yield.

Global oilseed production is projected at 453.5 million metric tons, up from the previous month. Global soybean production is projected at 258.6 million metric tons, down 0.4 million metric tonnes mostly due to a reduction in the United States.

A large flaxseed crop is about to be harvested in eastern Europe (including Poland, Ukraine, Russia, and Kazakhstan) which could supply most of flax import demand in the EU. Prices have dropped which may reduce incentives to grow flax in the region in 2012.

Pulses and special crops supply expected to decrease

Since total production of pulses and special crops in Canada is expected to decrease, due to decreased areas seeded to peas and lentils, the supply is estimated to decrease by 18% despite record high beginning stocks. Exports are forecast to decrease by 22% due to lower exports of dry peas. Total domestic use is expected to be similar to 2010/2011. In general, prices are forecast to increase from the previous crop year and for some crops, to rise to historically high levels, due to total lower supply both in Canada and around the world.

Heartier and higher yielding canola could be born

A research initiative, which involves Agriculture and Agri-Food Canada, Genome Alberta, and nine private partners from world-wide, aims to sequence the genomes of major Brassica oilseed crops, such as canola and mustard.

This international research consortium has determined the complete DNA sequence or genome of Brassica rapa (B. rapa), which is one of two ancestral species of modern canola (Brassica napus or B. napus), Canada's most lucrative oilseed crop. This research could help plant breeder develop new canola varieties that are higher-yielding, with greater disease and drought resistance.