Total production of wheat, barley, oats and corn in 2015/2016 is forecast to increase to 52.8 MMT (million metric tons), a 4 percent increase over 2014/2015 levels of 50.8 MMT. Lower domestic supplies due to low carry-in stocks are forecast to result in total exports decreasing three percent from anticipated exports levels of 26.4 MMT for 2014/15. Imports of corn are forecast to fall in 2015/2016 due to increased production, but will remain at above average levels. Proposed legislation that would level the playing field for U.S. farmers delivering to Canadian grain elevators remains stalled.

Canada: Grain and Feed Annual In brief

Planting intentions survey results were released in late April. While the trend of the survey results was consistent with industry expectations, the magnitude was questionable for some crops, especially for wheat and oats. Based on the planting intentions surveys as well as industry discussions, Post forecasts total production of wheat, barley, corn and oats to increase 4% from the previous year's level to 52.8 MMT. For wheat and barley, the slight increases in production will not be enough to off-set the low carry-in stocks. As a result, export levels are expected to decrease slightly in 2015/2016.

Increased corn and oats production will be just enough to partially off-set low carry-in stocks; however, high oats prices and tight domestic supplies in corn are forecast to result in lower exports. The livestock industry is not expected to grow in 2015/2016; however, use of corn for ethanol may increase slightly in 2015/2016 as a result of Quebec's participation in a cap and trade program designed to reduce the province's carbon emissions.

According to industry sources, Bill C-48, most commonly known as the Modernization of Canada's Grain Industry Act, is stalled and unlikely to be passed into law before the federal elections currently scheduled for October 19, 2015. This means that the proposed amendments that would have resulted in leveling the playing field for U.S farmers delivering grain to Canadian elevators – by allowing for grading of U.S. grain - are unlikely to pass in the short to medium term.

Planting Intentions Survey Results for Wheat, Barley, Oats and Corn

Statistics Canada released the results of its March seeding intentions survey on April 23, 2015. The results are presented in the table below:

Estimated Areas Seeded to Wheat, Durum, Barley, Corn and Oats in Thousand Hectares

2015 Estimate based on Survey Results

% change from Year 2014

% change form 5-year average

% change from 10-year average

Wheat (all)

10,073

2.9

6.4

5.0

Durum

2,226

15.8

27.6

15.8

Barley

2,622

10.2

-4.4

-20.1

Oats

1,475

30.3

20.8

-3.7

Corn

1,323

6.2

-1.5

3.8

Total

15,492

6.5

4.9

-1.4

Discussions with industry revealed that planting decisions had been delayed longer than average as indicated by slow seeds sales. This was due to there not being obvious winners. The increases in acreage seeded to wheat, barley, corn and oats are largely reflective of a recovery of area that could not be seeded the previous year due to inclement weather.

While the survey results suggest that area seeded to wheat (all wheat) will increase 3 percent above the previous year's level to reach 10,073 thousand hectares (THa), Post discussions with industry suggest that this estimate is likely to be adjusted down to 9,800 THa. Area seeded to durum is expected to rise and account for twenty-two percent of the total area seeded to wheat, 4 percent above the five-year average. The survey results suggest that 2,226 THa will be seeded to durum which is a 16% increase over the previous year's levels, and is a 27.6% increase over the 5-year average. Again, discussions with industry suggest that while this number of areas seeded to wheat will increase compared to the previous year due to a combination of a recovery of area that could not be seeded, and lower stocks of good quality durum, it will likely be a little lower than suggested by the survey results due to falling returns for durum. While wheat remains a core part of the rotation, competing crops offer better returns.

The estimate for area seeded to barley is in line with industry expectations and area seeded is expected to increase to 2,622 THa, which represents a 10 percent increase above the previous year's level, but only a 4 percent decrease from the 5-year average. Barley acres have been declining due to competition from other more lucrative crops, a declining livestock industry, and a lack of investment in genetics to entice producers to grow more barley.

According to survey results, area seeded to oats is expected to increase to 30 percent from the previous year's level to reach 1,475 THa. This is 20.8% above the 5-year average but four percent below the 10-year average. Based on Post discussions with industry, the survey is likely overestimating the area that will be seeded to oats and area seeded will likely be closer to 1,320 THa. Oat acreage has struggled due to flat prices, stagnant demand from the food side and uncertainty around transportation channels in recent years.

According to survey results, area seeded to corn is expected to increase 6% above year 2014/2015 levels and is slightly below (1.5%) the 5-year average. This is in line with industry expectations as the demand for corn remains steady due in part to a steady demand from the ethanol industry resulting from a mix of federal and provincial mandates, as well as provincial targets for greenhouse gas reductions.

Wheat

Production, Supply and Distribution Estimates:

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

10,442

10,441

9,460

9,346

0

9,700

Beginning Stocks

5,052

5,052

9,652

9,652

0

6,183

Production

37,530

37,530

29,300

29,281

0

29,550

MY Imports

446

446

480

480

0

460

TY Imports

441

441

480

480

0

460

TY Imp. from U.S.

319

319

0

460

0

450

Total Supply

43,028

43,028

39,432

39,413

0

36,193

MY Exports

23,238

23,270

23,500

22,900

0

22,200

TY Exports

22,157

22,138

24,000

22,900

0

22,200

Feed and Residual

4,930

4,930

5,000

5,000

0

4,500

FSI Consumption

5,208

5,176

5,330

5,330

0

5,200

Total Consumption

10,138

10,106

10,330

10,330

0

9,700

Ending Stocks

9,652

9,652

5,602

6,183

0

4,293

Total Distribution

43,028

43,028

39,432

39,413

0

36,193

1000 HA, 1000 MT, MT/HA

Commentary:

2015/2016

For 2015/2016, area seeded to all wheat is expected to remain at levels similar to the previous year with a forecast marginal increase of 1.5 percent. An increase in spring wheat acreage is expected to be offset by a 33% decrease in winter wheat planting which was not possible due to a very wet fall in 2014. Area seeded to durum is expected to rise 8 percent above 2014 levels and is nearly 20 percent above the 5–year average. Total area seeded to all wheat is forecast to be close to 9,935 THT and is largely reflective of a recovery of areas that were not able to be seeded the previous year due to inclement weather. While the Statistics Canada planting survey results suggest that area seeded to all wheat and to durum, respectively, will be close to 3 percent and 16 percent respectively, Post has lowered area seeded to all wheat and durum to reflect discussions with industry. Price outlook for durum is flat to moderate due to a rise in world supplies and the anticipation of a better quality from the 2015/2016 Canadian crop. While wheat prices are attractive due to strong demand and lower domestic supplies, there has been increasing concerns about growing fusarium issues in wheat which has been more present in recent years due to higher moisture, the ability to get quality seed (especially durum) and concerns with the impact on the markets due to the Black sea tensions which may have contributed to area seeded to total wheat remaining flat. Assuming more average weather will help increase area harvested compared to the previous year, and assuming normal yields, total wheat is forecast to reach 29,550 TMT, a marginal 1% increase over 2014/2015 production levels. This however represents an increase of 3.6% from the 5-year average of 28,521 TMT.

Flat production levels and lowers carry-in stocks will result in lower supplies in 2015/2016. As a result, exports are forecast lower at 22.2 MMT, a 3% decrease from 2014/2015 estimated levels. This is still well above the five year average of 19.0 MMT. The Canadian grain industry is actively working on trying to gain market share in countries in Western Africa. Feed use is expected to fall slightly due to lower supplies and more barley being available. Stocks are forecast to be drawn down to 4,293 TMT.

2014/2015

Despite problems with protein and quality having overshadowed much of the domestic discussion on the 2014/2015 crop, exports have continued at record pace. Quality issues have been a factor for world supplies, not just Canada, and the Canadian industry has taken on the challenge by showing clients how the lower grades can be used in such a way that it does not impact the final product. In addition, many of the factors that are causing the wheat to be graded lower are not actual factors that affect the functionality of the wheat. For example, wheat is being downgraded for mildew but is does not go deep enough to affect the color when milled. Other factors are able to be addressed through blending. This combined with a weaker Canadian dollar and high supplies will keep exports strong through 2014/2015. Due to slightly lower supplies due to lower domestic supplies, exports for 2014/2015 are expected to fall 1.5% from 2013/2014 export levels to 22.9 MMT. Stocks will be drawn down to more manageable levels. Durum supplies for quality and quantity will be tight until the new production comes forward. Wheat into feed is higher than average due to low barley supplies.

Barley

Production, Supply and Distribution Estimates:

Barley

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

2,652

2,652

2,140

2,136

0

2,375

Beginning Stocks

983

983

1,924

1,924

0

852

Production

10,237

10,237

7,120

7,119

0

7,875

MY Imports

9

9

25

20

0

15

TY Imports

9

9

25

20

0

15

TY Imp. from U.S.

9

9

0

15

0

0

Total Supply

11,229

11,229

9,069

9,063

0

8,742

MY Exports

1,559

1,561

1,300

1,320

0

1,250

TY Exports

1,714

1,580

1,300

1,320

0

1,250

Feed and Residual

6,566

6,566

5,500

5,691

0

5,550

FSI Consumption

1,180

1,178

1,200

1,200

0

1,092

Total Consumption

7,746

7,744

6,700

6,891

0

6,642

Ending Stocks

1,924

1,924

1,069

852

0

850

Total Distribution

11,229

11,229

9,069

9,063

0

8,742

1000 HA, 1000 MT, MT/HA

Commentary:

2015/2016

Area seeded to barley is expected to increase between 10 percent above the previous year's levels and is a reflection to a return to more normal levels. The 5-year average for area seeded is 2,742 THa. Seeding intentions survey results of 2,622 THa are in line with industry expectations. Assuming a return to more average area harvested and yields, production is forecast at 7,875 TMT, representing a 10 percent increase over 204/2015 production levels, but a 4.4 decrease from the five-year average. Barley acres have been declining due to competition from other, more lucrative crops, a declining domestic livestock industry and a lack of investment in genetics to entice producers to grow more barley. North American livestock inventories strengthening and the depreciated Canadian dollar will support barley exports in 2015/2016. Exports, however, will be limited by low domestic supplies and the need to build stocks as the anticipated increase in production will not be able to offset the very low carry-in stocks. Exports are forecast to fall to 1,250 TMT, five percent below the 2014/2015 expected export level.

Stocks will remain tight, despite the new crop due to the low carry-in stocks and the demand rationing will continue. In feed, lower price spreads to alternative ingredients will continue to drive down feed barley use in least cost formulations. Stocks will remain flat as the new crop production will not be enough to off-set low carry-in stocks.

2014/2015

Low domestic supplies and quality issues will limit barley exports in 2014/2015. China has been a big buyer of barley this year, as they do not mind using barley that does not quite meet the Canadian malt grade for malting purposes. This has helped support exports and therefore prices. Low domestic supplies, combined with the availability of a lot of feed wheat, will is resulting in lower feed barley usage in areas that are deficient in feed barley. Stocks will be pulled down to low levels. Domestic feed usage is lower due to the fact that prices for barley in areas that are deficient are high relative to alternative ingredients such a feed wheat.

Corn

Production, Supply and Distribution Estimates:

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

1,480

1,480

1,230

1,227

0

13,000

Beginning Stocks

1,549

1,549

1,600

1,600

0

1,287

Production

14,194

14,194

11,500

11,487

0

12,245

MY Imports

506

506

1,500

1,500

0

1,000

TY Imports

679

679

1,500

1,500

0

1,000

TY Imp. from U.S.

646

646

0

1,500

0

1,000

Total Supply

16,249

16,249

14,600

14,587

0

14,532

MY Exports

1,949

1,949

500

500

0

500

TY Exports

1,917

1,917

500

500

0

500

Feed and Residual

7,520

7,520

7,500

7,500

0

7,500

FSI Consumption

5,180

5,180

5,400

5,300

0

5,350

Total Consumption

12,700

12,700

12,900

12,800

0

12,850

Ending Stocks

1,600

1,600

1,200

1,287

0

1,182

Total Distribution

16,249

16,249

14,600

14,587

0

14,532

1000 HA, 1000 MT, MT/HA

Commentary:

2015/2016

According to planting intentions survey results, area seeded to corn is anticipated to increase 6 percent over the previous year's levels. This increase is largely driven by producers in Eastern Canada not being able to get the winter wheat in the ground in the fall. This estimate is in line with industry expectations and represents a marginal 1.5 percent decrease from the 5-year average. Production is forecast to reach 12,245 TMT, 7 percent increase over 2014/2015 levels and in line with the 5-year average. Increased production will not be able to offset the low carry-in stocks and will result in above average imports, although lower than the import levels anticipated for 2014/2015 crop year. Imports are forecast to fall by around 33% as a result of the new crop, but will remain well above average at 1.0 MMT. Supplies are forecast to remain relatively the same as supplies in 2014/2015 as a result of the new crop not being high enough to off-set low carry-in stocks. Exports are forecast at average levels due to adequate supplies; however, they will draw down stocks to historical lows. Feed and industrial uses are expected to remain on trend. There is no expansion of the domestic ethanol fuel industry expected for 2015/2016.

2014/2015

Lower domestic supplies due to difficulties at harvest have limited exports and will result in a significant increase in corn imports in 2014/2015. Corn imports are expected to increase 40% in 2014/2015. Exports are expected to be at average levels. Feed consumption is expected to remain constant due to too much uncertainty (COOL outcome) around market conditions for there to be interest in expanding the herd at the time, despite attractive hog prices. The Quebec government has entered phase 2 of its cap and trade carbon program that is part of the Western Climate Initiative (linked to California's emissions trading system). As of January 1, 2015, enterprises that distribute or import fossil fuels in Quebec will have to comply with the system and this will likely result in slightly higher blending rates of ethanol than currently done to meet the 5% blend federal mandate. The provinces of Quebec and Ontario have entered into a carbon cap and trade program to meet their provincial greenhouse gas reduction targets. Blending of ethanol is anticipated to remain steady at about 10 percent in both provinces, well above the federal blend mandate of 5 percent. However, impact on corn usage as a result of this new policy will be limited due to the fact that there has already been over-blending in the two provinces due to provincial policies geared to encourage greenhouse gas reductions, as well as ethanol at times being less expensive. In addition, the federal blend mandate is a pooled 5% blend mandate (5% of gasoline pool in Canada must be renewable fuel) and therefore obligated parties would blend up to 10 percent in areas with denser populations and less or none in areas that are more remote. Stocks will be drawn down in 2014/2015 due to low supplies resulting from difficulties at harvest.

Oats

Production, Supply and Distribution Estimates:

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

1,113

1,041

910

912

0

1,250

Beginning Stocks

506

506

1,031

1,031

0

724

Production

3,906

3,906

2,910

2,908

0

3,200

MY Imports

24

24

10

20

0

10

TY Imports

26

26

10

20

0

10

TY Imp. from U.S.

14

14

0

20

0

10

Total Supply

4,436

4,436

3,951

3,959

0

3,934

MY Exports

1,659

1,659

1,700

1,700

0

1,500

TY Exports

1,728

1,728

1,700

1,700

0

1,500

Feed and Residual

931

1,006

800

800

0

800

FSI Consumption

815

740

800

735

0

725

Total Consumption

1,746

1,746

1,600

1,535

0

1,525

Ending Stocks

1,031

1,031

651

724

0

909

Total Distribution

4,436

4,436

3,951

3,959

0

3,934

1000 HA, 1000 MT, MT/HA

2015/2016

Attractive pricing and the recovery of areas left unseeded the previous spring is anticipated to result in a 10% increase in acreage seeded to oats. According to survey results, area seeded to oats is expected to increase to 30 percent from the previous year's level to reach 1,475 THa. This is 20.8% above the 5-year average but four percent below the 10-year average. Based on Post discussions with industry, the survey is likely overestimating the area that will be seeded to oats and area seeded will likely be closer to 1,320 THa. Low stocks are the main reason that there are attractive prices for oats in 2015/2016. In general, oats acreage has struggled due to flat prices, stagnant demand from the food side, and uncertainty around transportation channels in recent years. Production is expected to increase to 3,200 TMT, 10% over the previous year level. Logistics issues are not expected to be a defining factor in export levels in 2015/2016. Exports for 2015/2016 are forecast to fall to 1.5 MMT due to U.S stocks having been built up, less demand for oats in the cereals market due to changing consumer preferences, and lower demand from the horse industry due to anticipated high oat prices. Similar downward trends are expected for Canadian consumption in food uses.

2014/2015

Oats are moving again in 2014/2015 after a disastrous previous year that was fraught with logistics issues. Exports are being supported by a weak Canadian dollar and lower quality which help drive down prices but Canadian oats are facing competition from Europe in the US market as companies try to manage their risk against logistic snafus. US supplies of oats are high due to the fact that a lot of the oats moved at the end of crop year 2013-2014 as well as higher US production. Domestic use in feed is a little lower due to the availability of feed wheat, as well as a little more oats being directed into human consumption.

POLICY

Canada's Agricultural Growth Act

Canada's Agricultural Growth Act, formerly referred to as Bill C-18, received royal assent on February 25, 2015 and is now law. Among other changes, the law brings Canada's Plant Breeders' Rights Act into alignment with provisions for plant breeders' rights under UPOV 1991. In general, the majority of the farm groups and industry have expressed support for the changes that have been enacted, including the Canadian Seed Trade Association, Cereals Canada, the Alberta Wheat Commission, and the Western Barley Growers to name a few. They are hopeful that with the Plant Breeders' Rights Act now in compliance with UPOV 91, Canada will attract new investment and result in access to new crop varieties, especially in cereals.

Ability of U.S. Farmers to Receive a Statuary Grade from Canadian Grain Commission Stalled

According to industry sources, Bill C-48, most commonly known as the Modernization of Canada's Grain Industry Act, is stalled and unlikely to be passed into law before the federal elections currently scheduled for October 19, 2015. This means that the proposed amendments that would have resulted in leveling the playing field for U.S farmers delivering grain to Canadian elevators – by allowing for grading of U.S. grain - are unlikely to pass in the short to medium term.

Transportation

Deficiencies in rail capacity continue to be a topic widely studied and debated. A return to relatively lower supplies compared to previous years, in addition to less competition from the oil industry due to significantly lower oil prices, will help transportation flows and velocity along all corridors in 2015/2016. In addition, mandatory grain volume movements to ports imposed on Canada's two main railways, Canadian National Railway and Canadian Pacific, which some believe were resulting in poor service to north to southern transportation corridors expired on March 28, 2015, and are not expected to be an issue for the 2015/2016 forecast year.

The Canada government has undertaken a review of the Canada Transportation Act to review its current policies and study what needs to be amended in order to address its future needs. The dependence of Canada's agricultural sector on export markets means that the grain and oilseed industry has been very active on providing information on what reforms should be made. The report is expected to be presented to the Canadian Parliament by December 2015. There has also been an increased effort from the federal government (through funding) as well as the grain, oilseed, and special crop industry as well to render public information on railway performance.

Bee Health

Bee Health continues to be a going concern to the agricultural industry in Canada, especially in Eastern Canada (Ontario and Quebec) where production of corn and soybeans is most prominent. Pollinators are an important factor in canola production. The province of Ontario is proposing changes to the pesticide regulation, under the Pesticides Act, to address the impact that they believe pesticide exposure is having on pollinator health. The Ontario government has proposed new regulatory requirements to reduce the number of acres planted with neonicotinoid-treated corn and soybean seed by 80 per cent by 2017. The regulatory proposal is available for public comment until May 7, 2015. If approved, it will take effect on July 1, 2015.

Also on the issue of pollinator health, the National Bee Health Roundtable held its third workshop in March 2015. The objective of the group is to develop a National Bee Health Action Plan with key objective to address factors factor affecting bee health.

Canadian Wheat Board Sold

On April 15, Canadian Minister for Agriculture, Gerry Ritz announced that the Canadian government has given its approval of an investment deal between G# Global Grain Group and the CWB. G3 Global Grain Group will invest 250 million dollars in the CWB and has plans to develop a coast to coast grain processing and shipping network across Canada. As laid out in the Canadian Wheat Board (Interim Operations) Act, the CWB had until August 2016 to submit a commercialization plan for the Minister of Agriculture to consider. In accordance with the Act, since 2014, the CWB has been searching for a strategic investor. In April 2015, the announcement was made that the CWB had reached an investment deal with a strategic partner enabling it to become a private and commercial organization.

Modernization of the Grain Varietal Approval System

The Canadian government has announced changes to the way crop varieties are registered for use in Canada. The changes are designed to streamline the process and allow Canadian farmers faster access to new varieties. One significant change is the incorporation by reference which will allow value chains consensus that should speed up the process. The government has stated that additional consultations will take place with stakeholders in the coming months.

PULSES(Peas, Lentils, Beans and Chickpeas)

Estimated Areas Seeded to Peas, Lentils, Beans, and Chick Peas in Thousand Hectares

2015 Estimate based on Survey Results

% change from Year 2014

% change form 5-year average

Peas

1,550

1%

13%

Lentils

1,356

8%

18%

Beans

111

-10%

1.2%

Chickpeas

57

-18%

-20%

Total

3,073

3%

12%

2015/2016

Higher returns relative to other crops is expected to support an increased area seeded to peas and lentils. Planting survey results suggest that area seeded to beans and chickpeas will fall. In chickpeas, the decrease in area seeded is likely due to burdensome carry-in stocks. Total production of peas, lentils, beans and chickpeas is forecast at 6,330 TMT, 11% higher than the previous year's production level. Total export levels are expected to remain similar to 2014/2015 expected levels of 4,900 TMT.

2014/2015

Total exports for 2014/2015 are expected to reach 4,900 TMT. Pea and lentil exports remain strong. There is steady demand from India and China for peas and demand from India, Turkey, and the UAE for lentils. Healthy supplies and demand from the Middle East and Europe has lifted exports levels of chickpeas for 2014/2015 compared to 2013/2014 levels.