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

For 2004-05, total grain and oilseed production in Canada is estimated by Statistics Canada to increase to 63.6 million tonnes (Mt) from 59.7 Mt for 2003-04 and the 10 year average of 58.5 Mt. In western Canada, production is estimated to increase to 48.2 Mt from 44.2 Mt in 2003-04, as a result of a sharp increase in yields despite the abnormally cold growing season. In eastern Canada, production decreased marginally to 15.4 Mt, as the decline in harvested area offset the increase in yields. For 2004-05, total supplies of grains and oilseeds are expected to rise to 77.1 Mt from 72.7 Mt in 2003-04 and compared to the record of 81.4 Mt set in 1999-00.

For 2004-05, total exports of grains and oilseeds are projected to decline to 24.2 Mt from 25.3 Mt for 2003-04, as expected smaller barley and canola exports more than offset the projected rise in wheat exports. Total domestic use of grains and oilseeds is forecast to rise to a record 38.8 Mt due to higher feeding and a slight rise in food and industrial use. Carry-out stocks are projected to increase sharply to 14.2 Mt versus 11.0 Mt in 2003-04 and the record 18.5 Mt set in 1992-93. In general, the quality of the western Canadian crop is sharply below normal, with less than a third of the CWRS wheat falling into the top two grades, and with 66% of the canola expected to be grade No.1. In eastern Canada crop quality is average. For all grains and oilseeds, except flaxseed, prices are forecast to decline sharply, largely due to the bumper crops in the US, the expected large South American production, the appreciation of the Canadian dollar against the US dollar and the slow growth in world consumption. Factors to watch are: Chinese import demand, South American growing conditions, EU grain export policy, the US winter wheat seeded area, ocean freight rates and the Canadian/US exchange rate.

WHEAT (excluding durum)

For 2004-05, production is estimated at 20.9 Mt, 8% higher than 2003-04 and the highest since 1999-00, due to a record 2.71 t/ha (40 bu/ac) average yield. Supplies are forecast at 25.2 Mt, 8% above last year and close to the 10-year average. However, the proportion of the CWRS crop falling into the top grades has been significantly reduced by frost and moisture damage, and over a third of the crop is expected to be of feed quality. Total domestic use of wheat is projected to increase, due to greater use of wheat for feed. Total exports are forecast to increase slightly, with carry-out stocks expected to rise by 12%, 4.8 Mt. It is currently assumed that much of the feed wheat surplus to domestic needs will be delivered to the Canadian Wheat Board (CWB) for export, although a portion is expected to be carried over into 2005-06 due to extremely low feed wheat prices. The CWB Dec. Pool Return Outlook (PRO) for No.1 CWRS 11.5% protein is $187/t, in-store Vancouver/St. Lawrence (I/S VC/SL), unchanged from last month but down by $19/t from last year. Protein premiums are expected to increase, due to
lower protein content in both the Canadian and US spring wheat crops, with the PRO for No.1 CWRS 13.5% at $202/t, $9/t below 2003-04.

DURUM

Production increased by 16%, with higher yields offsetting a smaller area. Supplies are forecast to increase by 10% to 6.75 Mt, vs the 10-year average of 6.3 Mt. However, exports are expected to decline slightly, due to weak
world import demand. The percentage of the Canadian durum crop falling into the top grades is expected to be below normal, but supplies of high quality durum are expected to be adequate. Carry-out stocks are projected to increase by almost 30%, to 2.3 Mt, the highest in four years. The CWB PRO for No.1 CWAD 11.5% protein is down
by $3/t from Nov. at $197/t, I/S VC/SL, $27/t below 2003-04. The premium to No.1 CWRS 11.5% is projected at $10/t, down from $18/t in 2003-04.

BARLEY

Production is estimated to increase by 7% due to higher yields, despite lower seeded area. Supplies are forecast to increase by 11% due to higher production and carry-in stocks. Feed use is projected to increase, due to higher
supplies in western Canada and increased shipments to eastern Canada. Exports of malting barley are expected to drop significantly as lower crop quality reduces the selection rates, although import demand from China is projected to recover. Exports of feed barley are also expected to decrease due to competitions from Europe and relatively low overseas prices, despite increased supplies and low prices in Canada. Carry-out stocks are forecast to increase sharply. Off-Board feed barley prices are expected to decrease by about $25/t from 2003-04 to $110/t, due to increased domestic supplies and lower US corn prices. The CWB Dec. PRO for No.1 CW feed barley
is $117/t and $110/t, I/S VC/SL, for pool A and B, respectively, compared to $169.21/t for 2003-04. The PRO for Special Select Two Row designated barley is $178/t, versus $200.70/t for 2003-04, due to higher supplies in Europe.

OATS

Production decreased marginally, as higher yields have only partially offset lower harvested area. Supplies are forecast to increase by 6% due to higher carry-in stocks. Exports are expected to decline slightly due to decreased US import demand. As a result of lower US corn prices, oat prices are forecast to fall. US oats are expected to be priced at a premium of 20% to corn on a per tonne basis.

CORN

Production fell by 8%, as lower harvested area more than offset higher yields. Supplies fell by 5% despite marginally higher imports related to lower production in eastern Canada. The feed use of corn is forecast to decline by 7%, as feed wheat and barley replace some of the corn. Carry-out stocks are forecast to decline
sharply. Chatham corn prices are forecast to drop to $105/t, due mainly to record US corn production.

CANOLA

Production increased by 14% from 2003-04, to 7.7 Mt, the second highest on record. Total supplies are forecast to increase by only 8%, due to lower carry-in stocks. Domestic crush is forecast to decline by 6%, to 3.2 Mt, due to lower crush margins and competition from burdensome world veg-oil supplies. Exports are also forecast to
decrease by 9%, due to lower shipments to Mexico and Pakistan. Carry-out stocks are forecast to rise sharply from 2003-04 to a burdensome 1.5 Mt. The average Vancouver cash price is forecast to fall to $280-320/t, as a result of the stronger Canadian dollar and lower US soyoil prices.

FLAXSEED (excluding solin)

Production decreased by 31%, due to lower harvested area and lower yields because of frost and the unusually cold growing seasons. Supplies are forecast to decrease by 30%. Exports are forecast to decrease to 0.45 Mt due to tight supplies. Carryout stocks are expected to drop from 2003-04 to very tight levels. The average Thunder Bay cash price is forecast to rise to $475-575/t, on support from tight supplies.

SOYBEANS

Production increased by 34% from 2003-04 to a record high 3.05 Mt, due to an increase in harvested area and sharply higher yields. Supplies are forecast to increase to 3.3 Mt, the third highest on record. Food and industrial use is forecast to remain stable, while exports and carry-out stocks decrease slightly. The average Chatham price is forecast to decrease to $210-250/t, under pressure from lower US soybean prices and the stronger Canadian dollar.

Complete report with tables, in PDF format: http://www.agr.gc.ca/mad-dam/e/sd1e/2005e/jan2005_e.pdf