In its first spring wheat production report for 2018, on Friday, August 31, Statistics Canada estimated this year’s Canadian spring wheat crop at 21.56 MMT. This is down 3% compared to the previous year and the 5-year average.
For total wheat, StatsCan estimates this year’s crop at 29 MMT. This is down 3% compared to the previous year and down 8% compared to the 5-year average. Additionally, this is slightly below the average pre-report guesstimate range of 29.3 to 30.9 MMT and thus can be viewed as slightly bullish.
The projected decline in spring wheat production is the result of average yields falling by 10% year-over-year to 46.6 bushels per acre. In contrast, seeded acres has increased by 9% to 17.3 million acres (as reported in the June 2018 StatsCan acreage report)
There is a big question in this report that hasn’t been answered though: how has August’s Canadian weather impacted spring wheat 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 spring wheat tends to be, on average, 12% below the final production number released in December. This usually amounts to 2.64 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. .
Ultimately, StatsCan Report Today was bullish for Canadian wheat. As such, Minneapolis hard red spring wheat prices climbed double digits on the Friday. Ultimately, this has been a positive price direction, but we’re certainly cognizant of how the Canadian spring wheat production number can be increased.