February Revisions to AAFC’s Supply and Demand Tables

The next-largest revision to stocks was shown for wheat (excluding durum), with ending stocks for 2020-21 revised 400,000 mt lower to 4.9 mmt due to upward revisions in domestic use by the same volume. Coincidentally, the February WASDE report released on Feb. 9 also included a 400,000 mt upward revision to Canada’s domestic use. A major difference between the two forecasts is that the USDA has pegged Canada’s all-wheat domestic disappearance at 10 mmt as compared to AAFC’s 8.5 mmt, with USDA forecasting a much tighter ending stocks estimate of 4.63 mmt as compared to AAFC’s 5.850 mmt.

The February estimates point to a modest increase of 137,000 mt of wheat stocks from 2019-20 to 2020-21 along with a 213,000 mt increase in durum stocks, with all-wheat stocks to rise 351,000 mt or 6.4% in 2020-21 given current forecasts to 5.850 mmt.

Some major changes to AAFC’s seeded acre forecast were made this month, after the initial forecast was first released in January. After the release of the January estimates, media pieces pointed to the government’s pessimistic view of barley acres, while AAFC had also included a modest increase in wheat acres (excluding durum) at a time when wheat is facing competitive pressures in both the U.S. and Canada from a number of alternatives.

The February estimates included an upward revision in forecast seeded acres for 2021 for barley, oats and canola, as indicated by the brown bars on the chart, with by far the largest upward revision an 827,785 acre increase in the forecast for barley. A 1-million-acre downward revision was made to wheat acres (excluding durum) to facilitate this expansion, along with a downward revision in lentil acres of 247,100 acres.

At a forecast 18.523 million acres, the area planted to wheat (excluding durum) will have fallen for a second year and to the lowest area planted in four years. Spring wheat acres will face an even greater hit on a percentage basis, with Statistics Canada forecasting winter wheat acres seeded in the fall of 2020 at 1.5748 million acres, the highest reported in four years. Given current forecasts, wheat ending stocks are to rise by a modest 100,000 mt in 2021-22 (excluding durum), while when combined with durum statistics, all-wheat stocks are to rise by 450,000 mt.

If we consider AAFC’s average crop price reported for the current crop year, we see that the average wheat price is forecast to rise by $15/mt from 2019-20 to 2020-21, while the average barley return is up $23/mt, peas up $65/mt, lentils up $115/mt, soybeans up $156/mt and canola is up $171/mt. New-crop wheat futures will need to do some heavy lifting in order to buy acres.

Meanwhile, attractive prices seen for old-crop and new-crop barley as exports to China squeeze prairie supplies and ending stocks are revised lower for 2020-21 is expected to see producers increase barley acres for a fourth year to 7.9 million acres, up 4.2% from 2020 and compares to the five-year average of 6.8 million acres. The current forecast includes a rise in ending stocks in 2021-22 to 900,000 mt but are forecast to remain tight and below 1 mmt for a fourth consecutive year and compares to the five-year average of 1.326 mmt.

This month’s data included a 247,100 acre increase in the forecast for 2021 canola acres seeded from the January estimate. At 21.6 million acres, this area would be up 3.2% from 2020, the highest in three years and roughly 100,000 acres below the five-year average. It is interesting to note that 2021-22 ending stocks are left unchanged at 700,000 mt after both export and crush volumes are reported down from 2020-21. The average price is forecast at $600 mt, down from $655/mt in 2020-21, which reflects track Vancouver prices.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow him on Twitter @CliffJamieson

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