Principal field crop stocks in Canada are up 30 per cent and it's affecting market prices
Wednesday, February 5, 2014
by SUSAN MANN
Overall stocks of principal field crops were up nearly 30 per cent by the end of last year compared to a year ago, and that increase is impacting prices and possibly farmers’ seeding intentions.
There’s clear recognition the big carry over “is having an effect on our market prices” and driving them down, says Barry Senft, CEO of Grain Farmers of Ontario.
The stock numbers may also impact farmers planting intentions. Senft says he heard at meetings last week some farmers talked of returning corn seeds in exchange for soybeans. “It (the stock levels) will have a big impact on seeding intentions.”
Farmers may also be exchanging seeds for other reasons, for example, switching to crops where the prices haven’t declined as much as others.
There could also be a further impact on prices as a result of the stock level numbers “as some of these commodities try and buy back some acreage. Even if there’s a significant amount in store, it still means some of these commodities need to ensure that they have a consistent supply,” he explains, noting some prices might reflect commodities trying to ensure they maintain or increase acres.
But it all depends on what companies have in futures contracts and on their customers’ requirements. Senft says each player within commodities will be evaluating the stock levels and farmers’ seeding intentions. If companies get nervous that seeding intention forecasts may not result in enough supply, that may result in crop price increases.
Statistics Canada reported this week increased production in 2013, especially on the prairies, resulted in the overall growth in stocks. On-farm stocks grew significantly while commercial stocks were down, the statistics gathering agency notes.
Senft agrees. Stock level increases, especially in wheat, are “just reflective of the big crops that have been harvested.”
For grain corn, total stocks rose 10.8 per cent from Dec. 31, 2012 to 11.5 million tonnes. Commercial stocks were down 6.5 per cent as of Dec. 31, 2013 compared to the same date in 2012 but there was a record amount of on-farm grain corn stocks.
For wheat, total stocks rose 37.7 per cent from Dec. 31, 2012 to 28.4 million tonnes. That was due to a 38 per cent annual increase in wheat production in 2013. On-farm stocks reached a record high of 25 million tonnes, which was up 52.5 per cent compared to the same date in 2012. Commercial stocks fell 19.2 per cent to 3.4 million tonnes over the same time period.
Total stocks of soybeans rose 2.4 per cent to 2.7 million tonnes as of Dec. 31, 2013. On-farm stocks rose 21.6 per cent to 1.9 million tonnes, while commercial stocks fell 25 per cent from 2012 levels to 800,000 tonnes.
About the commercial stock levels being down, while on-farm stocks are up, Senft says “hopefully in the commercial system you have grain that’s moving forward (to customers). The worst thing would be to have the commercial system full of grades of wheat, for example, that aren’t in demand. To have a little less in the commercial system isn’t bad either.”
Statistics Canada also reported stock levels for oats, barley and canola. BF