Situation report — January 2012

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Domestic grains and oilseed production expected to rise in 2012

According to Agriculture and Agri-Food Canada's (AAFC) publication Canada: Grains and Oilseeds Outlook, the total production of grains and oilseeds in Canada is expected to rise by 5% in 2011/12 to nearly 66 million metric tonnes, but the supply will decrease marginally because of lower carry-in stocks. The quality of the crop has generally been average to above-average. Total exports are forecast to increase as slightly higher exports of wheat and oilseeds more-than offset lower exports of coarse grains. Total carry-out stocks are expected to decrease significantly to about 15% below the 5 year average. In general, prices for grains and oilseeds are expected to remain historically high, similar to 2010/11.

For 2012/13, the areas seeded to all crops are forecast to rise largely due to the expected decline in area in summerfallow, assuming a major portion of the area which was too wet to seed in western Canada in 2011 will be seeded. Normal precipitation, abandonment and crop quality are assumed. For all crops, yields are expected to return to trend levels. Total production of grains and oilseeds in Canada is forecast to increase by 7% to 70.3 million metric tonnes. Exports and total domestic use are forecast to increase slightly. Carry-out stocks are forecast to increase but remain below average.

Pulses and Special Crops decline in 2011/12

For 2011/12, total production of pulses and special crops in Canada is expected to fall by 28% from last year to 4.1 million metric tonnes, due to lower harvested area and despite higher yields as reported by Agriculture and Agri-Food Canada's (AAFC) publication Canada: Pulses and Special Crops Outlook. Supply has decreased by only 18%, however, as the lower production is partly offset by record-high carry-in stocks. The quality of the crop has generally been average to above-average. Total domestic use is expected to be similar to last year at 0.8 million metric tonnes. Total exports are forecast to fall by 20% mainly due to lower exports of dry peas. Total carry-out stocks are forecast to fall by 22% to 1.2 million metric tonnes. Pulses and special crops prices are forecast to rise from the 2010/11 level, and for some crops to historically high levels, due to tight Canadian and world supply. The main factors to watch are the global financial situation, especially in the European Union, exchange rates and the condition of the world crops, particularly in the Indian subcontinent, Turkey and Australia.

Global supplies of wheat projected to be higher, coarse grains to hold steady and soybeans decline

Global wheat supplies for 2011/12 are projected higher with production raised for Kazakhstan, Brazil, and Russia as reported in United States Department of Agriculture's World Agriculture Supply and Demand Estimates. Kazakhstan production is raised as nearly perfect growing season weather is reflected in a new record yield. Production is raised 0.8 million metric tonnes for Brazil, in line with the latest government estimate. Production for Russia is raised 0.2 million metric tonnes reflecting the latest official estimate.

Lower 2011/12 projected exports for Australia are more than offset by increases for the United States and Russia. Global consumption is raised with a 1.0 million metric tonne increase in expected domestic disappearance in Kazakhstan where record supplies will be difficult to store and maintain. Global ending stocks for 2011/12 are projected to increase by 1.5 million metric tonnes.

Global coarse grain (oats, barley, corn and rye) supplies for 2011/12 are nearly unchanged this month as higher corn production in the United States, Ukraine, EU-27, and Russia is mostly offset by lower expected corn production in Argentina and the lower sorghum production estimate for the United States. Global barley and oats production are also raised, mostly reflecting higher crop estimates from Russia.

Argentina 2011/12 corn production is lowered 3.0 million metric tonnes as extended dryness since late November and periods of extreme heat in late December and early January have sharply reduced yield prospects. Recent rains have brought much needed relief from high temperatures and dryness and are expected to stabilize crop conditions, but substantial damage has been done, especially to corn that was exposed to heat during pollination and early grain fill. Corn production is raised 1.5 million metric tonnes for Ukraine based on the latest official indications of record yields and output. EU-27 and Russia corn production are each raised 0.4 million metric tonnes based on the latest official estimates. Brazil corn production is unchanged as rising area prospects for second crop corn offset a reduction in first crop yields resulting from December and early January dryness in the southern growing areas.

Global corn trade for 2011/12 is raised slightly with lower projected corn exports from Argentina more than offset by higher exports from the United States and Russia. Imports are raised 1.0 million metric tonnes for China, more than offsetting reductions for Syria and Taiwan. World corn ending stocks are raised 1.0 million tons as lower stocks in Argentina are more than offset by higher stocks in Ukraine and China. At 130.1 million metric tonnes, global stocks are nearly unchanged from 2010/11.

Global oilseed production for 2011/12 is projected at 464.7 million metric tonnes, down 0.3 million metric tonnes with lower soybean production more than offsetting higher projections for sunflower seed and rapeseed. Global soybean production is projected at 261.1 million metric tonnes, down 2.2 million mostly due to lower production forecasts for South America. The Argentina soybean crop is projected at 51.3 million metric tonnes, down 1.5 million due to lower projected area and yields. Excessive heat and dry conditions since December throughout much of the principal growing area is expected to limit soybean plantings and reduce yields from earlier expectations. The Brazil soybean crop is reduced 1 million metric tonnes to 75.1 million reflecting hot, dry conditions in recent weeks. Global sunflower seed production gains mostly reflect larger crops in Russia and Ukraine. Russia's State statistical agency preliminary harvest data indicate a higher yield, resulting in a record 9.7 million metric tonne crop. Ukraine sunflower seed production is projected higher at a record 9.7 million metric tonnes based on increased harvested area. Other changes include increased rapeseed production for Australia.

Global oilseed trade for 2011/12 is projected at 114.9 million metric tonnes, down 0.9 million mainly reflecting reduced soybean trade.Lower soybean exports for Argentina and the United States are only partly offset by an increase for Brazil.Imports are reduced for EU-27, Russia, Taiwan, Japan, and Turkey.Soybean imports for China are unchanged at 57.4 million metric tonnes.Global oilseed ending stocks are projected at 76.0 million metric tonnes, down 0.7 million from last month as reduced soybean stocks in Brazil and Argentina are only partly offset by higher U.S. soybean ending stocks.