The U.S.D.A. came out with its quarterly grain stocks report on Monday, Sept. 30 and showed the market that there is apparently more corn and soybeans out there than everyone was expecting but slightly less wheat than pre-report trade estimates.
Specifically, the U.S.D.A. reported that corn and soybean inventories were 823.6 million bushels and 141 million bushels respectively, both down 17 per cent from inventories a year ago.
As for wheat, total U.S. wheat stocks were seen down 12 per cent year over year to 1.855 billion bushels.
Specifically, total U.S. durum inventories are down 2.4 per cent year-over-year to 66.78 million bushels. Statistics Canada came out with their production estimates on Friday, Oct. 4 and they expect a big crop of wheat and canola to come off.
Specifically, total wheat output is seen at a record 33.026 million tonnes (expectation was for 32.7 million, previous estimate was 30.5 million in August), a 22 per cent production increase year-over-year.
Canola output is seen at a record 15.96 million tonnes, slightly below expectations of a 16.4 million-tonne crop (and August’s 14.7 million tonne estimate) but still 16 per cent more than 2012’s numbers.
Digging into the StatsCan numbers, Saskatchewan producers are seen taking off a record canola crop at 8.1 million tonnes, yet despite a lower harvested area (down 11.4 per cent from last year). Alberta and Manitoba are seen increasing canola production 2.3 per cent and 24.5 per cent respectively to 5.2 million and 2.6 million tonnes.
National barley and oats production is also seen increasing 18.1 per cent and 16 per cent respectively from last year to 9.2 million and 3.2 million tonnes on record average yields.
Flax output is seen increasing 36 per cent year-over-year to 664,000 tonnes, lentils production is up 11 per cent to 1.71 million tonnes, pea production is seen increasing 13.2 per cent to 3.78 million tonnes, and Manitoba will produce a record soybean crop of 909,000 tonnes, up 18 per cent.
If you haven’t figured it out yet, it’s a big crop (Statscan said the word “record” seven times in just 545 words).
Offsetting these bearish numbers, winter cereals seeding in the Black Sea continues to be slowed by wet weather. I.K.A.R. suggests that only 30 million acres of Russia’s winter wheat crop will be planted (compared to the original estimate of 37 million acres), resulting in a 2014 harvest of four million to 10 million metric tonnes less production (keep in mind that the winter wheat crop accounts for about 40 per cent of the total Russian wheat planting area).
Next door in Ukraine, the winter wheat crop accounts for about 90 per cent of their total wheat output and, at minimum, 30 per cent of that crop won’t get planted, meaning five to seven million tonnes in lost production.
All in all, with this year’s harvest basically in the books, the numbers are big. Let’s be realistic though – farming never really “ends” and that’s why I am turning relatively bullish on the wheat complex.
With the U.S. government shutdown, things can become even more volatile the longer the shutdown lasts. That being said, selling proactively is important because you never know when things may turn the other way.
Like how my grandfather (a lifelong farmer, a politician, a father to seven kids, and grandfather to dozens) looked at it: always expect the unexpected and prepare for the day times get a little tougher.
Brennan Turner is originally from Foam Lake, SK, where his family started farming the land in the 1920s. After completing his degree in economics from Yale University and then playing some pro hockey, Mr. Turner spent some time working in finance before starting
FarmLead.com, a risk-free, transparent online grain marketplace. His weekly column is a summary of his free, daily market note, the FarmLead Breakfast Brief. He can be reached via email (email@example.com) or phone (1-855-332-7653).