Highlights

According to Statistics Canada planting intentions and assuming average yields, Post forecast total production of wheat, barley, corn and oats to reach 53.6 million metric tons (MMT) in 2016/2017. This is a 1.5 percent increase from 2015/2016 production levels. Wheat and barley production are forecast to increase by 4.0 percent and 1.3 percent, respectively, from 2015/2016. Corn and oat production are forecast to drop by 1.6 percent and 5.9 percent, respectively. Total imports are forecast to fall nearly 5 percent due to mainly to higher domestic supplies of barley in 2016/2017. Total exports, mainly wheat, are forecast to drop nearly 9.0 percent due to lower domestic supplies and lower carry-in of wheat. Wheat ending stocks are projected to drop to a record low.

Executive Summary

2016/17

Statistics Canada planting intentions released on April 21, 2016 report that total area planted in 2016 will be 15.03 million hectares, slightly lower than area seeded in 2015 of 15.2 million hectares. Area seeded to durum, winter wheat (seeded in fall), barley and corn are forecast to increase 5.2 percent, 25.9 percent, 3.8 percent and 6.2 percent, respectively over 2015/2016 area seeded. Planting intentions suggest that area seeded to spring wheat and oats will fall from 2015/2016 by 5.7 percent and 10.9 percent, respectively. Canadian farmers also report that they intend to plant more pulse crops this year, mostly affecting spring wheat acres. Post has adopted these intentions and, assuming average yields, forecast total production of wheat, barley, corn and oats to reach 53.6 million metric tons (MMT). This represents a 1.5 percent increase from 2015/2016 production levels. Wheat and barley production are forecast to increase by 4.0 percent and 1.3 percent, respectively, from 2015/2016. Corn and oats production is forecast to fall by 1.6 percent and 5.9 percent, respectively. Total imports are forecast to fall nearly 5 percent due to higher domestic supplies of barley in 2016/2017. Total exports are forecast to decrease nearly 9 percent due to lower domestic supplies and lower carry-in of wheat.

Wheat

Market Begin

Year

Canada

2014/2015

2015/2016

2016/2017

Aug 2014

Aug 2015

Aug 2016

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

9480

9480

9600

9577

0

9547

Beginning Stocks

10436

10406

7075

7075

0

3854

Production

29420

29420

27600

27594

0

28700

MY Imports

502

502

485

485

0

500

TY Imports

490

490

485

485

0

500

TY Imp. From US

348

348

0

350

0

350

Total Supply

40328

40328

35160

35154

0

33054

MY Exports

24111

24111

22000

22500

0

20500

TY Exports

24825

24825

22000

22500

0

20500

Feed and Residual

3812

3812

3600

3600

0

3600

FSI Consumption

5330

5330

5200

5200

0

5200

Total Cons.

9139

9142

8800

8800

0

8800

Ending Stocks

7075

7075

4360

3854

0

3754

Total

40328

40328

35160

35154

0

33054

Distribution

Planting intentions published by Statistics Canada show farmers intend to plant 6.2 percent more corn in 2016/17 than in 2015/2016. Farmers in Quebec and Ontario produce 90 percent of Canada's corn crop and are reporting a 4 percent increase over 2015/2016 area seeded. Farmers in Manitoba are reporting a 44% increase over 2015/2016 area. Area seeded to corn in Manitoba has been steadily increasing since 2007 due to the development of earlier maturing varieties.

Post has adopted the Statistics Canada seeding intensions and forecasts area harvested to rise to 1.39 million hectares, nearly 6 percent higher than 2015/2016. The increase in area seeded to corn is forecast to be offset by a return to average yields resulting in Canadian corn production of 13.345 MMT for 2016/2017. This is 1.6 percent below 2015/2016.

Consumption

In Canada, the largest market for corn is livestock feed, followed by ethanol production. No change in renewable fuels mandates is expected in Canada in 2016/2017 that would impact the demand for ethanol. However, lower fuel prices are encouraging higher consumption, thus greater demand for ethanol. While there seems to be some loosening of provincial policies in Western Canada that have been restricting hog expansion, any increase in hog production will be gradual. The repealing of the Country of Origin Labelling (COOL) legislation is also expected to have little impact on feed consumption in the next crop year. However, lower relative prices and ample supplies in 2016/17 are expected to spur additional feed demand slightly, up 100,000 tons from 2015/16 to 8.1 MMT. A slight increase in demand for ethanol industry is also forecast for 2016/2017.

Ethanol usage in 2015/2016 is expected to increase in response to more gasoline consumption resulting from lower gas prices. This increase is reflected in Post expecting a FSI consumption to reach 5.45 MMT; 50,000 tons above USDA official number.

Trade

Imports are expected to remain at 1.0 MMT in 2016/2017, mainly to meet the needs of the Canadian ethanol industry. Corn exports are expected to drop to 500,000 tons in 2016/17 from 1.0 MMT in 2015/16.

Stocks

Corn stocks are forecast to increase to 1.726 MMT in 2016/2017 as a result of higher carry-in and lower exports. Corn stocks in 2015/2016 are forecast lower to 1.511 MMT, slightly lower than USDA official estimates due to Post using the Statistics Canada production number and anticipating a higher FSI usage.

Corn

Market Begin

Year

2014/2015

2015/2016

2016/2017

Sep 2014

Sep 2015

Sep 2016

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

1227

1227

1310

1312

0

1390

Beginning Stocks

1600

1600

1402

1402

0

1511

Production

11487

11487

13600

13559

0

13345

MY Imports

1558

1558

1000

1000

0

1000

TY Imports

1533

1533

1000

1000

0

1000

TY Imp. From US

1472

1472

0

980

0

980

Total Supply

14645

14645

16002

15961

0

15856

MY Exports

423

423

1000

1000

0

500

TY Exports

395

395

1000

1000

0

500

Feed and Residual

7426

7426

8000

8000

0

8130

FSI Consumption

5394

5394

5400

5450

0

5500

Total Cons.

12820

12820

13400

13450

0

13630

Ending Stocks

1402

1402

1602

1511

0

1726

Total Distribution

14645

14645

16002

15961

0

15856

Barley Outlook

Barley

2014/2015

2015/2016

2016/2017

Market Begin

Aug 2014

May 2015

Aug 2016

Year

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

2136

2136

2350

2354

0

2486

Beginning Stocks

1950

1950

1217

1217

0

1478

Production

7119

7119

8225

8226

0

8330

MY Imports

136

136

115

150

0

50

TY Imports

165

165

90

150

0

50

TY Imp. from

76

76

0

75

0

50

Total Supply

9205

9205

9557

9593

0

9858

MY Exports

1516

1516

1400

1365

0

1500

TY Exports

1384

1384

1450

1365

0

1500

Feed and Residual

5222

5222

5350

5500

0

5685

FSI Consumption

1250

1250

1250

1250

0

1300

Total Cons.

6472

6472

6600

6750

0

6985

Ending Stocks

1217

1217

1557

1478

0

1373

Total Distribution

9205

9205

9557

9593

0

9858


Statistics Canada planting intentions for barley indicate that farmers intend to plant more barley in 2016/17. Area seeded is projected 3.7 percent above 2015/2016. Saskatchewan and Alberta reported a 7.6 percent and 1.9 percent increase in intentions, respectively. A reported 14.9 percent decrease in barley planting intentions in Ontario is not large enough to offset the increase in the other Provinces. Alberta and Saskatchewan are the largest barley producing provinces in Canada, together accounting for 86 percent of the Canadian barley production.Production

Post has adopted these intentions and, assuming average yields, forecasts barley production to reach 8.33 MMT, 1.3 percent above 2015/2016 levels of 8.226 MMT. Canada is the 4th largest barley producer in the world.

In recent years, Canadian barley producers have chosen to grow a relatively limited numbers of varieties of malting barley. In 2015, over 70% of the area seeded to malting barley in Western Canada was to two types of two-rowed malting barley cultivars – AC Metcalf and CDC Copeland. While there are new, higher yielding varieties of malting barley cultivars available, maltsters are comfortable with these two main cultivars. As a result, commercial opportunities for producers who wish to grow newer varieties are limited.

Trade

Generally, the bulk of barley exports are destined for the malting industry, with a smaller proportion for feed. In recent years, however, China has been importing increasing amounts of Canadian barley for use as both a feed and for its expanding malting industries. Barley exports to China have increased significantly over the last three years, and accounted for 55 percent of total Canadian barley exports in 2014/2015. China's announcement that it will end its corn stockpiling program could reduce Chinese demand of Canadian barley for feed use. In 2016/2017, Post is assuming that a return to average yields and quality will result in increased amount of malting barley to be available for export and help offset potential reduced import demand for feed barley in China. Post forecasts exports of barley to reach 1.5 MMT in 2016/2017.

Post estimate for barley exports in 2015/2016 is 1.365 MMT. This is 35,000 tons below official USDA estimates and is based on less malt barley available for exports due to weather damage, as well as export pace to-date (Aug-Feb).

Barley imports are forecast to fall in 2016/2017 due to large supplies. In 2015/2016, Post expects barley imports will reach 150,000 tons, 35,000 tons more than the official USDA estimate, based on import pace to date (Aug – Feb).

Consumption

On average, 80 percent of the Canadian barley crop is used domestically as feed for livestock. In 2016/2017, Post forecast feed consumption to increase slightly to 5.685 MMT, slightly higher than the Post revised estimate of 5.5 million tons in 2015/16. A small increase in FSI consumption is also forecast in 2016/17 to reflect expected growth in malt barley consumption given ample supplies.

In 2015/2016, malt exports pace (Aug – Feb) is similar to the previous year suggesting that barley going into the malting industry is on par with 2014/15. Post expects FSI usage of barley to remain level with the 2014/2015 levels.

Stocks

In 2016/2017, Post forecast stocks to drop slightly due to higher domestic use and exports. In 2015/2016 stocks will decline due to higher feed use.

OATS OUTLOOK

Oats

2014/2015

2015/2016

2016/2017

Market Begin

Aug 2014

Aug 2015

Aug 2016

Year

Canada

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

928

912

1050

1055

0

1000

Beginning Stocks

1054

1054

681

681

0

869

Production

2979

2979

3430

3428

0

3225

MY Imports

13

13

10

10

0

15

TY Imports

12

12

10

10

0

15

TY Imp. From US

11

11

0

0

0

14

Total Supply

4046

4046

4121

4119

0

4109

MY Exports

1692

1692

1600

1600

0

1600

TY Exports

1729

1729

1600

1600

0

1600

Feed and Residual

893

893

850

850

0

850

FSI Consumption

780

780

800

800

0

800

Total Consumption

1673

1673

1650

1650

0

1650

Ending Stocks

681

681

871

869

0

859

Total Distribution

4046

4046

4121

4119

0

4109


TradeFarmers are reporting that they intend to plant less oats in 2016/17. Higher expected returns on alternative crops are driving this change. Canadian farmers are reporting that they intend to plant 10.9 percent less area to oats in 2016/2017. Farmers in Saskatchewan alone, where about 50 percent of the oats are grown, are reporting a 16 percent drop in planting intentions compared to 2015/2016. Post has adopted the Statistics Canada seeding intentions and, assuming average yields, forecasts production at 3.225 MMT, a 22 percent decrease from 2015/2016 production.Production

Nearly all Canadian oats exports go to the United States, with a small portion going to Asian markets. Exports in 2016/2017 are forecast to remain at 2015/2016 export levels of 1.6 MMT.

Consumption

Market research shows that consumption of ready-to-eat cereal has declined in favor of ready to eat cereals bar and this has limited oats demand. In 2016/2017, consumption of oats for feed and FSI usage is forecast to remain at 2015/2016 levels of 1.65 MMT.

Stocks

In 2016/2017, oat stocks are forecast down slightly due to higher carry-in stocks being unable to offset a reduction in production.

POLICY DEVELOPMENTS:

Change in Government:

In October 2015, the federal Liberal Party of Canada won a majority government and the former Conservative government now forms the official opposition. With the change of government comes a demographic shift that has resulted in the most urban-based government in Canadian history. Some industry observers note that this may make it more difficult for agricultural issues such as market access, access to labor, low level presence and transportation to receive priority attention. Shortly after the government took power, the Prime Minister made public the mandate letters he sent to his Ministers. The mandate letters set the objectives that each Ministry in the government must work towards. The new government prioritized infrastructure, trade, and climate change which may be good for Canadian grains and oilseed producers who are heavily dependent on exports markets. The climate change agenda does not focus on biofuels, however, there may still be opportunities within that policy space for Canadian agricultural producers to demonstrate and market their contribution to greenhouse gas reductions.

Transportation:

Transportation is one area where the government has signaled it will put its resources. The Canadian Minster of Transport tabled the Canada Transportation Act. The review, which was to occur in 2015, was launched ahead of schedule due to a transportation log jam that impacted the agricultural sector heavily. The review is an exercise to identify the priorities and actions in the transportation sector needed to support Canada's long-term economic well-being. For the Canadian grains and oilseed sector, so heavily reliant on exports, an efficient grain handling system is the life blood of the industry.

In late April, 2016, the Canadian government announced that the provisions of the Fair Rail for Farmers Act will be extended for one year. The provisions of the Act focus on trying to achieve better rail service through measure designed to increase accountability and foster competitiveness.

With the collapse of the oil prices in late 2015 and 2016, the extra capacity in the rail system, combined with new dedicated rail programs put forth by the railway companies, railway capacity has been able to meet increased demand from the grains sector that needs to get the crop to export positions. Railway performance continues to be monitored very closely.