In its first corn production report for 2018, on Friday, August 31, Statistics Canada estimated this year’s Canadian corn crop at 13.8 MMT. This was slightly below the pre-report average guesstimate of 13.9 MMT. Thus, this can be viewed as neutral.
This decline is expected despite an uptick in harvested area. Harvested acreage are expected to increase by 2.4%. However, average yields are set to decline by 4.4% acre year-over-year from 159.7 bushels per acre to 152.6 bushels per acre.
We need to bear in mind that the StatsCan survey was conducted in July. Since then, two major corn producers – Ontario and Manitoba – have seen some significant heat stress in the month of August. Granted, you certainly need to stress the crop but there are obvious concerns that, in Ontario especially, enough rains didn’t come at the right time, and that will have impacted yields.
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 3-4% smaller than what the August report is showing.
However, the other thing to keep in mind is that the August production estimate from StatsCan for corn tends to be, on average, 7.4% below the final production number released in December. This usually amounts to 1 MMT more than what is published in the August report.
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. .
Overall, the StatsCan report today was mostly neutral to corn prices. Obviously, most of the attention is focused across the border in the US (and will continue to be the case going forward). .