USDA’s Canadian wheat carryout much lower
SASKATOON — The U.S. Department of Agriculture is forecasting a much smaller Canadian wheat carryout than Agriculture and Agri-Food Canada is predicting.
The USDA’s Foreign Agricultural Service (FAS) estimates 2025-26 ending stocks for all wheat at 5.82 million tonnes versus AAFC’s 7.35 million tonnes.
Western Producer markets desk analyst Bruce Burnett thinks the FAS number will likely be closer to reality.
“I’m sure a lot of the market participants are feeling that the StatCan number is a little too high,” he said.
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WHY IT MATTERS: Ending stocks are highly correlated with price.
The FAS number would “certainly be more supportive” for wheat prices, but either way it is still a healthy carryover and a significant increase over last year’s ending stocks, said Burnett.
Both agencies peg all wheat production at a record 39.96 million tonnes, 23 per cent above the five-year average.
An estimated 71 per cent of the CWRS crop made the top grade, so there is plenty of high-quality wheat for customers around the world.
Farmers harvested 7.1 million tonnes of durum, but only 22 per cent made the top grade, the lowest share since 2016, according to the FAS’s recent Grain and Feed Update report.
The FAS is forecasting 29.5 million tonnes of Canadian wheat exports versus AAFC’s 28.7 million-tonne estimate.
Burnett thinks the FAS estimate makes more sense.
He noted that bulk wheat exports were 12.25 million tonnes through week 28 of the crop year, according to the Canadian Grain Commission.
That is slightly more than one million tonnes above last year’s pace. Canada shipped out a record 29.22 million tonnes of wheat last year, so it’s hard to fathom it will drop below that level.
AAFC must be thinking wheat exports will tail off substantially during the final five months of the 2025-26 marketing campaign.
“I don’t particularly see a reason why that would happen,” said Burnett.
The only explanation would be that stocks would get so tight that prices would rise and make Canadian wheat less competitive on the world market.
“I don’t necessarily see that happening, to be honest,” he said.
Maybe AAFC thinks that canola exports will take off now that the Chinese market has reopened, which will take some of the available resources out of the West Coast ports.
However, he noted there was also a big push on canola exports late last year, and plenty of wheat still moved.
The FAS also has a higher domestic consumption number. It is forecasting 9.35 million tonnes compared to AAFC’s 8.17 million tonnes.
That is due in part to a larger domestic feed estimate of four million tonnes compared to 3.6 million tonnes.
“In Saskatchewan, late-season rains (September-October) improved pasture growth, but industry contacts state that overall average hay yields remain lower than normal,” stated the FAS.
“This might lead to higher uptake of feed wheat in the province in 2025-26; however, feed wheat is not a complete substitute for hay.”
The FAS’s larger export and domestic use estimates are somewhat offset by its bigger import number of 600,000 tonnes compared to AAFC’s 156,000 tonnes.
Burnett pointed out that 1.45 million tonnes of AAFC’s total wheat carryout estimate is durum. The FAS did not provide a similar breakdown.
That leaves 5.9 million tonnes of spring wheat and other classes, which while large isn’t overly burdensome, especially given the current export pace.
“We are chewing through that, so we should see basis levels improve a little bit as we get closer to the end of the (marketing) year,” he said.
Source: producer.com