Drought in the Prairies has left Canada facing its weakest barley harvest on record, besides spurring a 2.6m-tonne downgrade to wheat harvest hopes, the country’s farm ministry said.
The ministry, AAFC, cut by 4.5m tonnes to 70.8m tonnes its forecast for the Canadian grains and oilseeds harvest this year, ditching hopes of a recovery in output from last season’s multi-year low.
Officials attributed the downgrade to a lack of rain in the Prairies, which produces the vast majority of the country’s output, and where “below-trend yields have been assumed to account for extremely dry conditions in regions of Alberta and Saskatchewan.
“Should dry conditions continue in western Canada, yields forecasts may have to be revised down further,” AAFC added.
The crop downgrade reflected in the main a 2.6m-tonne reduction to a four-year low of 27.1m tonnes in the estimate for Canada’s wheat output, on a lower sowings estimate as well as an expectation of the average yield falling to 2.83m tonnes per hectare, also a four-year low.
The production downgrade included a 500,000-tonne cut to 5.2m tonnes in the estimate for durum output.
Even including a lower forecast for exports, the weaker harvest fed through into expectations of unusually weak all-wheat stocks at the close of 2015-16 of 4.3m tonnes, a figure termed “low” by the ministry,.
The forecast for domestic Canadian wheat prices in 2015-16 was nudged higher by Can$10 a tonne to a three-year high of Can$215-245 a tonne, “because of the lower Canadian supply and the forecast weaker Canadian dollar”.
‘All-time record low’
However, AAFC also cut its forecast for barley production in Canada, one of the top exporters of the grain, by 1.04m tonnes to 6.90m tonnes, again ditching expectations of a recovery in output.
Indeed, due to “the continuing dry conditions in the western half of the Canadian prairies, production is expected to decrease to an all-time record low”, officials said, citing the prospect of a double whammy from higher abandonment and below-par yields.
“Depending on the province and the area within the Prairies, frost, dry and wet conditions have created quite a variable crop and will reduce the overall barley yield to below average.
“Manitoba barley is generally in good shape, but barley crop conditions deteriorate as you move further west across the Prairies.”
The weak production will leave Canada with record-low stocks of 500,000 tonnes of barley at the close of 2015-16, down 450,000 tonnes from the previous estimate.
That would represent a halving in inventories year on year.
AAFC lifted to Can$20 a tonne to Can$210-240 a tonne its forecast for season average domestic barley prices, as measured by benchmark Lethbridge values.
“The Lethbridge cash feed barley price is forecast to increase from 2014-15 due to the record low total supply and carry-out stocks, continuing trend demand for malt quality and a slight upturn in the US corn price for 2015-16,” the ministry said.
The comments come as investors are awaiting results of the CWB crop tour of the Prairies, seen as set to give a further insight into the extent of drought damage to crops.
“CWB’s tour of western Canada through the end of this week should confirm the concerns related to that crop as they move west,” said Brian Henry at Minneapolis-based broker Benson Quinn Commodities.
Still, on wheat, the downgraded CWB harvest forecast fell within the range of estimates investors have been talking of, and was a modest 400,000 tonnes below a forecast issued last week by the US Department of Agriculture, whose data set global benchmarks.
Futures in spring wheat, which accounts for the vast majority of Canada’s spring wheat crop, stood 0.8% lower at $5.52 ¼ a bushel in early deals in Minneapolis.
However, on barley, the AAFC harvest forecast was 600,000 tonnes below the USDA estimate.
(Source – http://www.agrimoney.com/news/canada-cuts-wheat-hopes-pegs-barley-harvest-at-record-low–8595.html)