Report Highlights:

The combined production of wheat, barley, corn and oat production is forecast to fall marginally in 2016/2017 as a result of small increases in wheat and barley production being off-set by a ten percent decrease in corn production. Total exports of wheat, barley, corn and oats in 2016/2017 are forecast to fall eight percent as increases in barley exports are not high enough to offset an anticipated drop in wheat exports. The weakness for the Canadian dollar compared to the U.S. dollar has been helping Canada aggressively push out grain exports in the 2015/2016 marketing year. This advantage will likely weaken in the coming months as oil is expected to recover somewhat and the Canadian dollars strengthens.

General Information:

2016/2017 Production: Overall wheat production in 2016/2017, Canada's primary grain crop, is forecast to increase by 3 percent from 2015/2016 production levels. Barley production is expected to increase 2 percent from 2015/2016 levels. Oat acres will be competing with wheat and oat production is expected to remain unchanged from 2015/2016 production level. Corn production is expected to decrease over 10 percent as a result of more acreage going to soybeans. Last year, while the Canadian dollar was falling, Canadian grain producers were enjoying the ability to buy inputs with a stronger Canadian dollar in the fall and spring and then sell the crop when the Canadian dollar was weaker. The stabilization of the Canadian dollar is expected to result in less expansion of land in production and foster a drive to efficiencies.

Exports and the Canadian Dollar: The weakness for the Canadian dollar compared to the U.S. dollar has been helping Canada aggressively push out grain exports in the 2015/2016 marketing year, despite high world supplies. This advantage will likely weaken in the coming months as oil is expected to recover somewhat and the Canadian dollars strengthens. Low ocean freight rates have also helped Canada expand its markets in the current marketing year.

Weather in 2016: A dry spring is predicted for western Canada due to a carry-over from a dry summer and below average precipitation occurring in the winter months. The El Nino weather pattern is weakening but will likely prevail through the spring of 2016 resulting in continued moisture deficits. Most recent weather data suggests that the La Nina effects, which would bring wetter weather to Western Canada, will only occur close to the harvest season.

Wheat

2014/2015

2015/2016

2016/2017

Market Begin Year

Aug 2014

Aug 2015

Aug 2016

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

9480

9480

9600

9600

0

9260

Beginning Stocks

10436

10436

7108

7108

0

4257

Production

29420

29420

27600

27594

0

28320

MY Imports

483

483

485

480

0

480

TY Imports

490

490

485

480

0

480

TY Imp. from U.S.

348

348

0

350

0

480

Total Supply

40339

40339

35193

35182

0

33057

MY Exports

24116

24116

20500

22000

0

20000

TY Exports

24832

24832

21000

22000

0

20000

Feed and Residual

3785

3785

3800

3725

0

3700

FSI Consumption

5330

5330

5200

5200

0

5200

Total Consumption

9115

9115

9000

8925

0

8900

Ending Stocks

7108

7108

5693

4257

0

4157

Total Distribution

40339

40339

35193

35182

0

33057

(1000 HA) ,(1000 MT)

Post forecasts Canada's 2016/2017 wheat harvested area at 9.26 million hectares, a 3.5 percent decrease from 2015/16 reported levels. Post expects to return to average yields that will offset the harvested area decline for an estimated 2016/17 wheat production of 28.3 million metric tons (MMT). This forecasted 3 percent increase in production over 2015/2016 production levels will not be sufficient to overcome low-carry-in stocks resulting in a lower forecasted total supply. Lower wheat supplies will limit Canadian wheat exports in 2016/2017. Exports are forecast to fall 9 percent from 2015/2016 estimated levels to reach 20 thousand metric tons (TMT). With stable cattle markets expected in 2016/2017 combined with tighter domestic wheat supplies, barley is expected to be a less expensive alternative to wheat resulting in a decrease in wheat destined for the feed industry. Lower domestic supplies will pull stocks down.

In 2015/2016, the lower Canadian dollar has resulted in wheat export pace well above the 5-year average but close to the previous year's export pace. A strengthening Canadian dollar and high world supplies combined with lower domestic supplies will slow the export pace as the marketing year progresses. Post expects exports in 2015/2016 to reach 22 TMT, 4.8 percent higher than USDA current official estimate of 21 MMT.

Barley

2014/2015

2015/2016

2016/2017

Market Begin Year

Aug 2014

Aug 2015

Aug 2016

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2136

2136

2350

2354

0

2450

Beginning Stocks

1950

1950

1217

1217

0

1543

Production

7119

7119

8225

8226

0

8400

MY Imports

136

136

50

50

0

50

TY Imports

165

165

25

50

0

50

TY Imp. from U.S.

76

76

0

50

0

50

Total Supply

9205

9205

9492

9493

0

9993

MY Exports

1516

1513

1500

1350

0

1450

TY Exports

1384

1384

1700

1350

0

1450

Feed and Residual

5222

5225

5200

5350

0

5400

FSI Consumption

1250

1250

1300

1250

0

1250

Total Consumption

6472

6475

6500

6600

0

6650

Ending Stocks

1217

1217

1492

1543

0

1893

Total Distribution

9205

9205

9492

9493

0

9993

(1000 HA) ,(1000 MT)

Post forecasts Canada's 2016/2017 barley harvested area at 2.45 million hectares, a marginal increase over 2015/16 area. Due to anticipated better yields, barley production in 2016/17 is forecast at 8.4 MMT, an increase of 2 percent over the previous year's level. Higher carry-in stocks will support an increase in exports, although stocks are forecast to increase slightly.

In 2015/2016, demand from the feed industry is expected to grow as cattle producers are beginning to switch to barley as a cheaper feed alternative as a result of tightening domestic supplies of wheat. Post expects feed to reach 5.35 MMT, a 2.9 percent increase above USDA official estimate. This trend is expected to continue in 2016/2017.

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Sep 2014

Sep 2015

Sep 2016

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1227

1227

1310

1312

0

1260

Beginning Stocks

1600

1600

1402

1402

0

1761

Production

11487

11487

13600

13559

0

12100

MY Imports

1558

1558

1000

1000

0

1400

TY Imports

1533

1533

1000

1000

0

1400

TY Imp. from U.S.

1472

1472

0

980

0

1372

Total Supply

14645

14645

16002

15961

0

15261

MY Exports

423

423

1000

800

0

500

TY Exports

395

395

1000

800

0

500

Feed and Residual

7426

7426

8000

8000

0

8000

FSI Consumption

5394

5394

5350

5400

0

5400

Total Consumption

12820

12820

13350

13400

0

13400

Ending Stocks

1402

1402

1652

1761

0

1361

Total Distribution

14645

14645

16002

15961

0

15261

(1000 HA) ,(1000 MT)

In 2016/2017, post forecasts a decrease in corn production from 2015/2016 levels. Corn production in 2016/2017 is forecast to fall to 12.1 MMT – a 10 percent decrease from 2015/2016 production levels. This is a result of increased acreage going to soybeans due to expected better returns. Imports are forecast to rise to 1.4 MMT as a result - the United States being the predominant supplier. Lower domestic supplies and strong demand from the feed industry is expected to limit corn exports in 2016/2017. In 2015/2016, a weaker Canadian dollar compared to the U.S. dollar is resulting in increased corn exports compared to the previous year; however exports will be limited by strong demand from the domestic feed industry. Post forecasts corn exports at 800 TMT, 2 percent lower than the current USDA official estimate. Ending stocks in 2015/2016 are expected to rise due to lower exports.

Oats

2014/2015

2015/2016

2016/2017

Market Begin Year

Aug 2014

Aug 2015

Aug 2016

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

928

912

1050

1055

0

1050

Beginning Stocks

1054

1054

681

681

0

825

Production

2979

2979

3430

3468

0

3400

MY Imports

13

13

10

10

0

10

TY Imports

12

12

10

10

0

10

TY Imp. from U.S.

11

11

0

10

0

10

Total Supply

4046

4046

4121

4159

0

4235

MY Exports

1689

1689

1600

1650

0

1705

TY Exports

1726

1726

1600

1650

0

1705

Feed and Residual

896

896

850

884

0

895

FSI Consumption

780

780

800

800

0

810

Total Consumption

1676

1676

1650

1684

0

1705

Ending Stocks

681

681

871

825

0

825

Total Distribution

4046

4046

4121

4159

0

4235

(1000 HA) ,(1000 MT)

Area harvested to oats is forecast to fall in 2016/2017 due to the low price of oats relative to wheat. However, with average yields expected, this should still result in 3.4 MMT produced in 2016/17 - marginally lower than the previous year's production level. Domestic supplies are forecast to increase as a result of higher carry-in stocks and will support exports. Stocks are forecast to remain flat. For 2016/2017, post forecasts oats exports at 1.65 MMT, slightly above current USDA official estimate of 1.6 MMT. A return to normal oat stock level in the U.S. is expected to result in export decreasing from 2014/2015 export levels