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The March 31 stocks report indicates supplies from the very large 2013 Canadian harvest continue to be worked down to a level that will not appear burdensome at the end of the crop year. (480 words)

Statistics Canada’s report on principle field crops at March 31 indicated that stocks were about 14 million tonnes above year ago levels. While this might seem like a big increase and, hence, a negative development, it is positive in the context of the very large 2013 crop and the 17.7 million tonne increase in Canadian 2013-14 crop year supplies. In essence stocks have been worked down by almost four million tonnes more than last year since harvest.

Most of this improvement has been the result of increased exports. Exports shipments from licensed elevators were 2.7 million tonnes above year earlier levels during the six months from October to March. In view of reports of adverse winter weather conditions, this must be regarded favourably and should auger well for the spring and summer months.

Judging by crop movements of Prairie crops so far this spring stocks will have declined to about 15 million tonnes by the end of the crop year. Although this is almost twice the level at the beginning of the crop year, it would be at about the same level as in the summer of 2010 - not remembered as a time of surplus. Further there is almost a couple of months to work down supplies further before the 2014 crop starts to be delivered in volume.

The most questionable assumption on this is whether farmers will continue to challenge the marketing system by delivering all the grain thye have. It is well within the realm of possibility that a significant number of farmers will choose to carry over at least part of their record 2013 crop.

The impact of this may be seen towards the end of the spring when farmers may prefer to concentrate their resources on nuturing the 2014 crop. Country elevator stocks are at a relatively high level at the moment but are likely to be run down at a faster rate than in previous years.

In the late summer the same scenario may emerge but with the prospects for the 2014 crop being a motivator. If harvest prospects are very good, farmers are likely to take advantage of every opportunity to empty their bins, but otherwise they may not be in too much of a hurry.

The big difference between this year and years in the past when carry-over stocks have been at surplus levels is that this year’s big supply has been the result of one large crop at a time when overseas markets for almost all crop have been relatively good. While farmers have been frustrated waiting for marketing opportunities, ultimately it will almost certainly be a record year for exports and the volume of Prairie crops marketed.

David Walker
May 5, 2014