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Canada: Grains and oilseeds outlook
Canada
December 9, 2005

Source: Agriculture and Agri-Food Canada/Agriculture et Agroalimentaire Canada

For 2005-06, Canadian grain and oilseed (G&O) production is estimated by Statistics Canada to increase to 66.7 million tonnes (Mt), versus 63.6 Mt in 2004-05 and the 10-year average of 59.2 Mt. Production in western Canada increased by 5% from 2004-05, to 50.8 Mt, as a result of higher yields and a larger harvested area. The quality of the wheat and barley crops has been reduced by the wet harvest conditions, with a below-normal proportion in the top grades. Oilseed quality, however, is good. In eastern Canada, production increased by 3% to 15.9 Mt, due to increased harvested area and above-average yields. For 2005-06, the total supply of grains and oilseeds in Canada has risen to a record 85.3 Mt, from 77.7 Mt in 2004-05, because of higher production and significantly
larger carry-in stocks. Exports are forecast to increase by 16% to 27.6 Mt due to increased supply and improved quality. Total domestic usage is also forecast to increase but carry-out stocks are forecast to rise by 10% to a historically high 17.9 Mt. World wheat prices are forecast to increase slightly from 2004-05, while soybean and corn prices are expected to decline. Prices in Canada will continue to be pressured by the strong Canadian dollar. The major factors to watch are: import demand from China, EU export subsidies, ocean freight rates, the Canadian trade investigations into imports of US corn, and the Canada/US exchange rate.

WHEAT (excluding durum)

For 2005-06, production is unchanged from the previous year, remaining about 5% above the 10-year average. Despite a decline in area, yield reached a record 2.77 t/ha (41 bu/ac), 18% above the 10-year average. Total supply is up by 5%, due to larger carry-in stocks. The percent of the crop falling into the top grades is estimated to be lower than normal, although better than in 2004-05, and the carry-in stocks are also estimated to be mainly of lower grades. As a result of increased supplies of milling quality wheat, exports are forecast to rise by 14%. Much of the lower quality wheat is expected to be absorbed by the domestic feed industry. Carry-out stocks are forecast to decline marginally. The Canadian Wheat Board (CWB) November Pool Return Outlook (PRO) rose for the 4th consecutive month and is now above 2004-05 for most grades and classes. Protein premiums are forecast to decline slightly from last year, but remain above the previous 3 years.

DURUM

Production increased by 19%, to a near-record 5.9 Mt, as a result of a record yield of 2.58 t/ha (38 bu/ac), 27% above the 10-year average. Total supply is up by 25% at a record 8.4 Mt. Exports are expected to increase by
15% due to dryness in North Africa and southern Europe, as well as reduced area in the EU resulting from policy changes. However, further growth in durum export potential is limited at this time. Carry-out stocks are projected to rise by almost 40% to a record 3.5 Mt, about three-quarters of a normal crop over the past decade. Farm-held
stocks are forecast to double, to a record 2.0 Mt. The CWB accepted only 50% of the durum offered in Delivery Series A, and it is unlikely that all durum offered in the B and C Series will be accepted. The CWB 2005-06 November PRO is well below 2004-05 for all grades, due to the larger supplies in both the US and Canada. For the first time since 1990- 91, pool returns for durum are expected to be below those for similar quality CWRS wheat.

BARLEY

Production decreased by 5% from 2004-05, as a result of lower area and yields. Total supply, however, is up by 4% due to high carry-in stocks resulted from the large production of low-quality barley in 2004-05. The quality of the 2005-06 crop is estimated to be below normal. Exports are forecast to rise by 29% due to higher feed barley
exports. Carry-out stocks are expected to drop significantly. The off-Board feed barley price is forecast to decline marginally. Malting barley prices will be pressured by higher world production, with the CWB PRO for Special Select 2-Row down by $7/t from 2004-05 to $172/t.

OATS

Production decreased by 7% due to lower yields. Total supply is down marginally, as lower production more than offsets higher carry-in stocks. Exports are forecast to decrease slightly because of lower US import demand. Carry-out stocks are expected to decrease. Feed oat prices are forecast to be $5/t higher than in 2004-05.

CORN

Production increased by 7% because of higher yields and harvested area. Since carry-in stocks are significantly higher than for 2004-05, domestic supply is up by13%. Corn imports, mainly from the US into eastern Canada, are expected to decrease by 26%. Industrial Use is forecast to rise, as a result of increased ethanol production.
Canadian prices are expected to be similar to 2004-05, as stronger domestic demand offsets lower US corn prices and the strong Canadian dollar.

CANOLA

Production increased by 25% to a record 9.7 Mt, due to higher area and significantly higher yields which resulted from ideal growing conditions across the western prairies. Total supply is expected to increase by 35% because of sharply higher carry-in stocks. Crop quality and oil content is significantly above normal. Domestic crush is expected to increase by 9% due to lower canola prices. Exports are forecast to rise by 32% because of decreased competition from the EU-25. Carry-out stocks are forecast to increase sharply, to a record 3.0 Mt. The average price is forecast to fall, under pressure from burdensome carry-out stocks in Canada and from low soyoil prices in the US.

FLAXSEED (excluding solin)

Production more than doubled to 1.1 Mt, reaching the highest level since 1998-99, due to significantly higher seeded area and sharply higher yields. Total supply is expected to rise by 75%. Exports are forecast to increase sharply on support from high domestic supplies, steady EU demand and higher crude oil prices. Carry-out stocks are expected to rise sharply, but are not be burdensome. The average price is expected to decline.

SOYBEANS

Production increased by 4% to a record 3.2 Mt due to higher yields. Domestic supply is estimated to increase by 6% and imports are forecast to decrease. Domestic use is expected to rise to near record levels. Exports are forecast to increase to a record high because of strong exports of edible soybeans. The average Chatham price is forecast to fall, as a result of weaker world soybean prices and the strong Canadian dollar.

Complete report in PDF format: www.seedquest.com/News/releases/2005/pdf/14307.pdf 

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