Canadian farmers on course for a bumper winter crop

Output of wheat, barley, oats and corn are all predicted to increase this year compared to last, with canola and soybean output falling.

Canada's national statistics agency compiled the production data using yield models based on satellite imagery instead of the standard grower survey.

Significant advances in the accuracy of satellite modelling made this possible, but it was also adopted to reduce the stress on farmers during the coronavirus pandemic.

The agency called total wheat production 35.74 million metric tonne (MMT), an increase of 10.5 per cent on last season and second only to the 37.59MMT crop harvested in 2013.

This increase is a result of a higher harvested area, up 2.3 per cent to 9.87 million hectares, and higher forecast yields, up 8 per cent to 3.65 metric tonne per hectare (MT/ha) compared to 2019.

Barley production was pegged at 10.55MMT, a year-on-year increase of 1.6 per cent but well below the country's record barley harvest of 15.56MMT way back in 1996.

The growth was driven by a 1.3 per cent increase in yield to 3.86MT/ha off a harvested area of 2.75 million hectares, 0.3 per cent higher than in 2019.

An increase of 6.3 per cent in the harvested area was the primary driver behind the projected growth in oats production of 6.1 per cent to 4.5MMT.

The season's yield projection is 0.2 per cent lower at 3.4MT/ha.

Canada is the world's largest canola producer, and the oilseed is the second-largest crop grown in Canada each year.

National production is expected to decline by 0.4 per cent to 19.4MMT this harvest compared to the 2019/20 crop, which was revised upwards from 18.65MMT to 19.48MMT.

This year's canola yield is forecast to increase by 1.2 per cent to 2.33MT/ha, but this is more than offset by a harvested area that is expected to decrease by 1.6 per cent to 8.34 million hectares.

The two biggest pulse crops in Canada are field peas and lentils and the Statistics Canada yield models have production 17.9 per cent and 25.1 per cent higher at 5.0MMT and 2.81MMT respectively.

In the row crop space, the Statistics Canada report is projecting an increase in corn output, but the soybean crop is tipped to edge lower.

The corn crop was pegged at 13.93MMT, 3.9 per cent higher than in 2019 and soybean production was pencilled in at 5.96MMT, 1.4 per cent lower than the previous season.

Canadian grain exports may have started slowly but they finished the 2019/20 marketing year with a bang.

This resulted in a reduction in wheat, canola, field peas and lentil stocks as at July 31 compared to the same time last year. Barley and oat stocks bucked the trend finishing higher year-on-year.

Disruptions in the rail network slowed the movement of grain to Canadian ports early in the marketing year, delaying the export program.

However, reduced demand for petroleum and consumer goods as a result of the COVID-19 pandemic in the second half of the season freed rail capacity to move more grain to port resulting in record grain shipments in late spring and over the summer period.

The commercial grain handling system in western Canada is very different to Australia. It simply does not have the capacity to store the entire crop at harvest.

More than 70 per cent of the annual harvest is stored on farm, predominantly in steel upright silos. The very low ambient temperatures eliminate storage pests over winter.

The capacity of the on-farm storage system in Canada is more than 75MMT, or 90 to 120 per cent of annual production depending on the crop size.

By contrast, on-farm storage capacity in Australia is around 15MMT.

Canadian supply chains generally operate a 'pull' delivery system where grain is moved from farm to a receival site and then to a port, 'just-in-time' for the arrival and loading of export vessels.

Australia's export supply chain mainly functions as a 'push' system where grain is moved from farm to upcountry or port storage facilities immediately after harvest and stored in readiness for the future arrival of export vessels.

Seventy-five per cent of grain exported from Canada travels long distances by rail from the prairie provinces to the two main west coast ports.

Journeys of 1,300 to 1,800 kilometres are commonplace.

Canada's oil and mineral fields are close to agricultural areas, so there is competition for rail network capacity.

By contrast, grain destined for export from Australia travels relatively short distances to port with journeys greater than 400 kilometres uncommon.

The Canadian harvest has commenced, but it is in its infancy.

While swathing of canola is underway in many regions, not much harvesting has occurred as yet.

And the jury is out on how badly yields were trimmed by the unseasonal heat and a lack of finishing moisture in some districts through August.

Weather forecasters say Canadian farmers are in for a more benign autumn than last year, which should help calm the harvest nerves.

The potential formation of a weak La Nia weather system should prevent a reoccurrence of last year's wet harvest nightmare for the majority of the winter crop area.

With higher production comes a bigger exportable surplus.

The USDA has Canadian wheat exports pencilled in at 24.5MMT based on their crop estimate of 34MMT.

That is much lower than the Statistics Canada number, and many on the ground in the Prairies are calling wheat production even higher at more than 37MMT.

Add to that the Russian wheat crop which has suddenly gone from maybe 78MMT to more than 82MMt and getting bigger.

The northern hemisphere is making wheat faster than the southern hemisphere is losing it at the moment and this only adds to exportable surpluses and competition for new crop Australian exporters.