Report Highlights:

Total Canadian wheat, barley, corn and oats production in 2015/2016 is forecast fall to 49.2 MMT, a 4 percent decrease corm 2014/2015 total production levels of 51.0 MMT. This decrease is due to an 11 percent decrease in wheat production caused by abnormally dry conditions during the growing season. Due to increases in area seeded, barley, corn and oats production levels all increased over the previous year's level. Wheat exports are forecast to fall to the five-year average level of 20.0 MMT, while barley corn and oats export levels will remain at levels similar to the previous year. Some corn U.S. exporters will require new provincial licenses in 2015/2016 to sell into the Ontario market. There is potential for disruption of rail service into the United States and up to Canada should bill S.650, the Rail Safety and Positive Track Control Extension Act not be passed before the New Year.

WHEAT

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Aug 2013

Aug 2014

Aug 2015

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

10442

10441

9480

9480

9600

9622

Beginning Stocks

5137

5137

10436

10446

7108

7108

Production

37530

37530

29420

29420

26000

26061

MY Imports

446

446

483

483

485

485

TY Imports

441

441

490

490

485

485

TY Imp. from U.S.

320

319

348

348

0

320

Total Supply

43113

43113

40339

40349

33593

33654

MY Exports

23270

23269

24116

24118

19000

20000

TY Exports

22157

23269

24830

24832

19500

20000

Feed and Residual

4199

4195

3785

3793

3800

3800

FSI Consumption

5208

5203

5330

5330

5200

5200

Total Consumption

9407

9398

9115

9123

9000

9000

Ending Stocks

10436

10446

7108

7108

5593

4654

Total Distribution

43113

43113

40339

40349

33593

33654

(1000 HA) ,(1000 MT)

Despite an increase in acreage seeded to wheat in the spring of 2015, extremely dry conditions in part of Alberta and Saskatchewan during the growing season resulted in lower production levels. Wheat production for 2015/2016 is estimated to be 26.1 million metric tons (MMT), 11 percent decrease from year 2014/2015 levels. The five and ten year production average is 28.0 MMT and 26.9 MMT, respectively. The drier than average conditions also resulted in very high protein levels for wheat and durum. Average protein levels for all grades of spring wheat are being reported to be 14.1 percent, while the durum average being reported is 13.9 percent.

Lower production levels, lower carry-in stocks and healthy world wheat supplies, are expected to limit wheat exports in 2015/2016 marketing year. Exports are expected to fall to the five-year average of 20 MMT, a 17.1 percent decrease from the previous year's export levels of 24.1 MMT.

Feed and wheat for food, seed and industrial use is forecast to maintain relatively similar to those levels experience in 2014/2015 due to no expected increase in demand from those sectors. Strong barley supplies mean that there will be no increase in demand for wheat as feed.

Stocks are forecast to be pulled down to lower than average levels resulting from lower domestic supplies.

BARLEY

Barley

2013/2014

2014/2015

2015/2016

Market Begin Year

Aug 2013

Aug 2014

May 2016

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

2652

2652

2136

2136

2350

2350

Beginning Stocks

983

983

1950

1950

1217

1217

Production

10237

10237

7119

7119

7600

7610

MY Imports

9

9

118

136

100

100

TY Imports

9

9

125

127

100

100

TY Imp. from U.S.

10

10

0

59

0

50

Total Supply

11229

11229

9187

9205

8917

8927

MY Exports

1559

1559

1544

1544

1500

1500

TY Exports

1714

1714

1500

1514

1500

1500

Feed and Residual

6510

6510

5231

5213

5000

5200

FSI Consumption

1210

1210

1195

1231

1200

1227

Total Consumption

7720

7720

6426

6444

6200

6427

Ending Stocks

1950

1950

1217

1217

1217

1000

Total Distribution

11229

11229

9187

9205

8917

8927

(1000 HA) ,(1000 MT)

Barley production in 2015/2016 is estimated at 7.6 MMT, an increase of 7 percent over the previous year's production levels. The increase in area seeded was high enough to off-set lower yields. The five-year production average is 8.1 MMT. The quality of the malt barley crop is better than expected, considering the very dry conditions experienced during the summer months. The quality is also better than the previous year's crop which increases the potential pool of malting barley. Similar to the case in wheat, early samples show higher than average protein levels which could be challenging for malsters.

Exports in 2015/2016 are forecast to remain close to 2014/2015 levels of 1.5 MMT. Domestic demand are also forecast to remain similar as there is only a marginal increase in cattle inventories expected in 2016 that should not impact feed demand. Exports in 2015/2016 are forecast to reach 1.5 MMT and feed use is forecast to remain steady at 5.2 MMT.

The Canadian barley industry expressed satisfaction that the Trans-Pacific Partnership deal was concluded and look forward to exploiting increased, predictable and secured access into the TPP markets, especially Japan. They also expected the domestic demand for feed barley to increase over time as Canada exports increased beef and pork as a result of more market access. The text of the TPP had not been released at the time of this report.

Stocks are forecast to be draw down as the increase in production over 2014/2015 is not enough to offset lower carry-in stocks. Stocks are forecast to fall to 1.0 MMT, the lowest level seen since 2012/2013.

CORN

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Sep 2013

Sep 2014

Sep 2015

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1480

1480

1223

1227

1300

1294

Beginning Stocks

1549

1549

1600

1600

1287

1402

Production

14194

14194

11487

11487

12300

12204

MY Imports

506

506

1500

1660

1500

1000

TY Imports

679

679

1500

1670

1500

1000

TY Imp. from U.S.

644

644

0

1604

0

980

Total Supply

16249

16249

14587

14747

15087

14606

MY Exports

1949

1949

500

422

500

500

TY Exports

1917

1917

500

487

500

500

Feed and Residual

7520

7520

7500

7550

8000

7600

FSI Consumption

5180

5180

5300

5373

5350

5300

Total Consumption

12700

12700

12800

12923

13350

12900

Ending Stocks

1600

1600

1287

1402

1237

1206

Total Distribution

16249

16249

14587

14747

15087

14606

(1000 HA) ,(1000 MT)

Corn production in 2015/2016 is estimated at 12.2 MMT, which represents a 6 percent increase over year 2014/2015 marketing levels. It is in line with the five-year average of 12.4 MMT. The production increase from 2014/2015 levels of 11.5 MMT is due to an increase in area seeded to corn.

Corn imports in 2015/2016 are forecast to fall to 1.0 MMT, a 40 percent decrease from year 2014/2015 import levels of 1.7 MMT. This decrease is anticipated as a result of adequate domestic supplies resulting from higher production levels and average carry-in stocks. Corn exports will be close to average levels and are forecast to be 500 TMT.

New rules on the sale and use of neonicotinoid-treated seed in Ontario came into effect on July 1, 2015 and will impact U.S. exports of neonicotinoid-treated corn into the province of Ontario. The purposes of the regulations are to significantly decrease the use neonicotinoid-treated corn and soybeans in Ontario. The government of Ontario has chosen this approach to address concerns on bee health in the province. This decision has not gone unchallenged as the lobby organization Grain Farmers of Ontario is challenging the Ontario government in court.

The new regulations require vendors of a neonicotinoid-treated corn and soybean seeds to obtain a "treated seed vendor's license". This will impact companies who export neonicotinoid-treated corn and soybeans to Canada and sell them through sales representatives. These companies will be required to obtain a license. To obtain this license, the vendor will be required to provide a set of information to the Ministry of Environment and Climate Change. The regulations have a phase in period which limits the circumstances and amount of neonicotinoid-treated corn and soybeans that can be sold to a producer. The regulations also require end-of-year reporting requirements for vendors for which they must detail their sales during the compliance period.

The demand from the feed industry is forecast to remain steady in 2015/2016 as no significant growth or shrinkage in the hog industry is anticipated in 2015/2016. Domestic usage of corn for biofuel production is not expected to grow beyond current levels in 2015/2016 as there has been no indication that there will be an increase in the provincial of federal renewable fuel content mandates. In addition, lower oil prices limit the profitability of discretional blending above mandated volumes. Based on the information available at this time on the government of Ontario's plan to create a carbon market, there will be no significant impact on the demand for corn for industrial use in 2015/2016.

OATS:

Oats

2013/2014

2014/2015

2015/2016

Market Begin Year

Aug 2013

Aug 2014

Aug 2015

Canada

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

1113

1113

928

912

1100

1093

Beginning Stocks

446

446

1054

1054

681

681

Production

3906

3906

2979

2979

3310

3292

MY Imports

24

30

13

19

10

15

TY Imports

26

32

10

20

10

15

TY Imp. from U.S.

14

21

0

20

0

10

Total Supply

4376

4382

4046

4052

4001

3988

MY Exports

1662

1662

1678

1683

1600

1600

TY Exports

1732

1732

1700

1700

1600

1600

Feed and Residual

870

870

902

902

850

837

FSI Consumption

790

796

785

786

800

800

Total Consumption

1660

1666

1687

1688

1650

1637

Ending Stocks

1054

1054

681

681

751

751

Total Distribution

4376

4382

4046

4052

4001

3988

(1000 HA) ,(1000 MT)

Oats production in 2015/2016 increased to 3.3 MMT, a 11 percent increase above year 2014/2015 production levels. This increase is a result of an increase in area seeded to oats. The increase in production, however, is not enough to offset low carry-in stocks so supplies will remain close to the previous year's level. Relatively low domestic supplies and lower demand due to increased supplies in the United States are expected to limit exports in 2015/2015. Exports are forecast to fall to 1.6 MMT, a 5 percent decrease from year 2014/2015 export levels of 1.683 MMT.

POLICY:

Transportation

Transportation has not been a major issue for the grain industry this year due in part to a greater availability of crews and power resulting from the reduction in economic activity in the Canadian oil industry. There has also been increased efficiency in management by the railway industry. There is, however, a potential for rail disruption in U.S.-Canada trade in the New Year.

Canadian and American class 1 railways have stated that they will be unable to meet the deadline set out in the U.S. Rail Safety Improvement Act of 2008. The compliance deadline for the regulations is December 31, 2015. They are asking the U.S. Congress to approve a bi-partisan bill, bill S. 650, the Railroad Safety and Positive Train Control Extension Act, that would extend the compliance deadline by 5 years. Canadian and American class 1 railways have stated that should the extension not be granted, they will be forced to suspend operations in areas where they are not in compliance. This potential gap in rail service would negatively impact U.S. grain trade between the Unites States and Canada.

New Federal Government:

On October 19, 2015, the Liberal Party of Canada won a strong majority of seats in the Canadian Parliament, replacing the Conservatives government. At the time of this report, the transition of responsibilities on-going and the new Cabinet, including the position of Minister of Agriculture, has not yet been announced. In general, there do not seem to be concerns that the new government will not ratify the Trans Pacific Partnership. They have made public statements reaffirming their pro-trade stance. Also encouraging for the grain sector is that the Liberal Party platform highlighted that the trade relationship between Canada, the U.S. and Mexico is essential to economic prosperity and that in order to support growth in trade, they will focus on cooperation to reduce impediments to trade and improve border infrastructure, including streamlining inspections.