In its first chickpeas production report for 2018, on Friday, August 31, Statistics Canada estimated this year’s Canadian chickpeas crop at a little more than 264,000 MT. Considering this is nearly triple last year’s crop, this can be viewed as bearish.
However the size of this crop has likely already been priced in.
The significant increase in chickpeas production is the result of (1) seeded acres skyrocketing nearly 200% to almost 470,000 acres (as reported in the June 2018 StatsCan acreage report), and (2) average yields flat year-over-year at 22.2 bushels per acre. However, compared to the 5-year average, chickpea yields are down a significant 20%.
There is a big question in this report that hasn’t been answered though: how has August’s Canadian weather impacted chickpeas yields and production. We need to bear in mind that the StatsCan survey was conducted in July. Since then, the Canadian Prairies have been pretty dry and crops were under significant heat stress.
Therefore, we might expect to see the yield and production numbers in the September 19th data/model-based estimates of Canadian crop production come in a bit smaller than what we’re seeing here today. Our gut says that these numbers might be 5-10% smaller than what the August report is showing.
The other thing to keep in mind is that the August production estimate from StatsCan for chickpeas is the only crop that they overestimate, relative to the final production number released in December. Specifically, on average, StatsCan overestimates the Canadian chickpeas crop by nearly 5%, meaning that December’s final production number released in December could come in at a little more than 250,000 MT. That’s still a significant jump from last year’s Canadian chickpeas harvest of 95,600 MT.
While we take government estimates (especially those from StatsCan) with a grain of salt, this one might take a full shaker-worth since the August weather might be so impactful. .
Ultimately, StatsCan’s production report could easily be considered bearish but we – along with a lot of other analysts – think that this bigger crop has been priced in.
The next report we’ll be looking to is Wednesday, September 19th, when StatsCan will put out a satellite/data-modelled projection. This report tends to be a bit closer to the final numbers, given it’s done at a later stage in the crop’s development.