Situation report — November 2011

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Higher seeded area of grains and oilseed offset by lower average yields

Total production of grains and oilseeds is estimated to be 63 million metric tonnes for the 2011/2012 crop year, similar to the previous year. 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. There was less area seeded to pulse crops which resulted in more area for grains and oilseeds.

According to Agriculture and Agri-Food Canada's publication Canada: Grains and Oilseeds Outlook, the supply of grains and oilseeds is forecast to decrease by about 4 % due to low beginning inventories. This expectation assumes normal crop quality and a slight decrease in exports, as lower exports of coarse grain (barley, corn, oats and rye) and oilseeds more than offset higher exports of wheat. In addition, a record-low is forecast for total ending inventories. Overall prices for grains and oilseeds are expected to maintain historically high levels, as in 2010/2011. Basic factors that would influence outcomes are harvesting conditions, temperatures and precipitation, exchange rates and the condition of world crops.

Dry pea and lentil area causes pulses and special crop area to drop

Statistics Canada estimates a 30% drop in pulses and special crops, mainly due to significant declines in dry pea and lentil area in the 2011/2012 crop year. Farmers are expected to seed less area to pulses and special crops and more towards grains and oilseeds. Record high levels of beginning inventories will likely result in only a 20% decline in the supply of pulses and special crops. Agriculture and Agri-Food Canada forecasts a marginal fall in domestic use due to improved crop quality and a sharp decrease in exports driven by lower expectations for dry pea exports. Total ending inventories are projected to drop by 24%. Given tight Canadian and world supplies, overall prices for pulses and special crops are forecasted to increase from the 2010/2011 level, and for some crops to historically high levels. Exchange rates and the condition of world crops, especially in the Indian subcontinent, Turkey and Australia are major factors that could affect this projection.

World wheat supplies projected to be higher, USDA reports

Global wheat supplies are expected to be 2.6 million metric tonnes higher mainly due to higher production in Kazakhstan and the EU-27. Latest government reports confirm that Kazakhstan had an extended harvest season in addition to a nearly ideal growing season. There has been higher reported production in the United Kingdom and Czech Republic. At the same time, there are small reductions for Argentina, Algeria and Ethiopia.

World wheat trade is expected to increase due to higher than expected imports from China, Brazil, a number of African countries, including Morocco and Algeria, and several FSU-12 countries neighbouring Kazakhstan. Partly offsetting this is a reduction in expected imports for South Korea where more corn feeding is expected. Exports are expected to grow for EU-27 and Russia given higher supplies in EU-27 and the continued heavy pace for shipment from Russia.

Global wheat consumption in 2011/2012 is forecast to rise 2.4 million metric tonnes as a result of higher levels of feeding for Kazakhstan, Brazil, and Serbia. Larger crops in Kazakhstan and Serbia support more wheat feeding. Recent rains in southern Brazil have reduced wheat quality in some areas increasing the potential for more feeding. Other countries expecting higher consumption are EU-27, Ethiopia, Kenya, and several smaller FSU-12 countries. Global ending inventories are forecasted to be 0.2 million metric tonnes higher.

Drops in US corn and EU-27 rye production slightly shrink coarse grain supplies

Global coarse grain (oats, barley, corn and rye) supplies for 2011/2012 are projected slightly lower with reductions in both US corn and EU-27 rye production more than offsetting higher Argentina sorghum production, higher EU-27 barley, oats production, and higher Kazakhstan barley production, according to the USDA. Many countries expect lower levels of corn production with Mexico representing the largest decline. In Mexico, production is lowered by 3.5 million metric tonnes because of a late start to the summer rainy season and an early September freeze in parts of the southern plateau corn belt reduced yields for Mexico's summer crop. Lower expected area for the winter crop, which will be planted in November and December, also reduces 2011/2012 corn production prospects.

Reduction in corn for Mexico, US and Serbia partly offset increases in 2011/2012 global corn production, as reported by the USDA. Corn production is raised 2.5 million tonnes for China with increases in both area and yields. EU-27 also expects higher levels of corn production, mostly from more output from France, Romania and Austria. Argentina is also forecasting higher than expected production with higher area.

Global coarse grain trade for 2011/2012 is forecasted to be higher with increased world imports and exports of barley and corn. Barley import forecasts are increased for Algeria, Saudi Arabia, and Jordan with export forecasts raised for EU-27 and Russia. Higher expected corn exports from Argentina and EU-27 support increases of corn import for China, Mexico and South Korea.

USDA forecasts global oilseeds to increase

Global oilseed production for 2011/2012 is projected at 454.8 million metric tonnes, up 1.3 million metric tonnes from the previous month. Global soybean production accounts for a quarter of the increases with larger crops projected for Brazil, Paraguay, and Mexico. Brazil soybean production is increased 1.5 million metric tonnes to 75 million with improved yield prospects related to rapid planting progress and good early season moisture throughout the country. These gains hold in the face of lower production expected for Argentina due to reduced area as producers shift to corn. Global sunflower seed production is forecasted to increase due to larger crops in Ukraine, EU-27, and Argentina.

Global oilseed trade is estimated at 113.3 million metric tonnes, down 0.8 million metric tonnes. Increases for Brazil and Paraguay were not sufficient enough to counteract reductions in soybean exports for the United States and Argentina.

There are expectations of lower soybean imports for Japan and Russia. Global oilseed crush is forecast to decline. Global ending inventories for 2011/2012 are forecast to be 73.9 million metric tonnes, with soybeans representing most of the change with increased stocks for the United States and China more than offsetting lower stocks in Argentina and Japan.