Voluntary Report - Public distribution

**Date:** 5/27/2008

**GAIN Report Number:** CA8035

CA8035

**Canada**

**Grain and Feed**

**Annual Report - Revised**

**2008**

**Approved by:**

![](media/image1.wmf)Lisa Anderson

U.S. Embassy

**Prepared by:**

Darlene Dessureault

**Report Highlights:**

For 2008/2009, total production of barley, corn and oats is forecasted
to decrease by 13% from year 2007/2008 production levels. Total
production of barley corn and oats is forecast at 23,700 TMT, down from
year 2006/2007 production levels of 27,329 TMT. This decline is due to
competition from higher revenue generating crops such as wheat and
oilseeds. For 2008/2009, wheat production levels are forecast to
increase 24%, jumping to 24,800 TMT from the previous year's level of
20,054 TMT. In pulse production, pea production is forecast to increase
significantly in response to high prices and strong world demand. This
report incorporates new data from Agriculture Canada and supersedes
Grain and Feed Annual report CA8026.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Annual Report

Ottawa \[CA1\]

\[CA\]

Table of Contents

[EXECUTIVE SUMMARY 3](#executive-summary)

[ALL WHEAT 3](#all-wheat)

[**2007-2008 Outlook** 3](#outlook)

[**2008-2009 Outlook** 3](#outlook-1)

[BARLEY 4](#barley)

[**2007-2008 Outlook** 4](#outlook-2)

[**2008-2009 Outlook** 4](#outlook-3)

[CORN 4](#corn)

[**2007-2008 Outlook** 4](#outlook-4)

[**2008-2009 Outlook** 5](#outlook-5)

[OATS 5](#oats)

[**2007-2008 Outlook** 5](#outlook-6)

[**2008-2009 Outlook** 5](#outlook-7)

[BEANS (DRY) 6](#beans-dry)

[**2007-2008 Outlook** 6](#outlook-8)

[**2008-2009 Outlook** 6](#outlook-9)

[PEAS (DRY) 6](#peas-dry)

[**2007-2008 Outlook** 6](#outlook-10)

[**2008-2009 Outlook** 6](#outlook-11)

[LENTILS 6](#lentils)

[**2007-2008 Outlook** 6](#outlook-12)

[**2008-2009 Outlook** 6](#outlook-13)

[CROP PRICES FROM THE CANADIAN WHEAT BOARD
7](#crop-prices-from-the-canadian-wheat-board)

[CANADIAN SEEDING INTENTIONS, March 31 2008
7](#canadian-seeding-intentions-march-31-2008)

[STATISTICAL TABLES 8](#statistical-tables)

[Find FAS on the World Wide Web 11](#find-fas-on-the-world-wide-web)

# EXECUTIVE SUMMARY

For 2008/2009, total production of barley, corn and oats is forecasted
to decrease by 13% from year 2007/2008 production levels. Total
production of barley corn and oats is forecast at 23,700 TMT, down from
year 2006/2007 production levels of 27,329 TMT. This decline is due to
competition from higher revenue generating crops such as wheat and
oilseeds. For 2008/2009, wheat production levels are forecast to
increase 24%, jumping to 24,800 TMT from the previous year's level of
20,054 TMT. In pulse production, pea production is forecast to increase
significantly in response to high prices and strong world demand.

This revised Grain and Feed outlook was generated using the March
planting intentions release by Statistics Canada on April 25^th^, 2008,
as well as the May 27^th^, 2008, grain, feed, oilseeds and special crops
outlooks from Agriculture Canada's Market Analysis Division, in addition
to industry sources.

# ALL WHEAT

## **2007-2008 Outlook**

Low supplies resulting from low carry-in stocks and low production
caused by a wet spring which delayed planting and a heat wave later in
the growing season that reduced yields is expected to limit exports in
2007-2008. Exports in 2007-2008 are forecast to be 15,256 TMT, 22% below
the previous year's levels. Fewer cattle on feed (reflecting in part,
high feed prices), and increased exports of live cattle to the United
States are the main factors for the sharp reduction in feed wheat
consumption forecasted for 2007/2008. Feed consumption in expected to
decrease by more than 25% in 2007/2008. For more information on the
Canadian livestock industry, please see GAIN report
[CA8009](http://www.fas.usda.gov/gainfiles/200802/146293813.pdf).
Wheat--fed ethanol plants coming on line in 2007-2008 are expected to
result in a 5% increase in wheat for industrial purposes, compared to
the previous year's level. Total domestic consumption is forecast to
decrease by 11% as the increase in industrial usage is not enough to
off-set the sharp decrease in demand on the feed side. Low supplies are
predicted to result in stocks being drawn down further.

## **2008-2009 Outlook**

High Canadian Wheat Board Pool Returns Outlook prices, resulting from
strong world demand, are encouraging farmers' planting decisions this
spring. Seeding intentions surveys published at the end of April suggest
that the wheat area harvested will increase by 16% from the previous
year's levels. All wheat production is expected to increase by almost
25% over year 2007/2008 levels if average yields are assumed. The
forecasted 2008/2009 wheat production is 24,800 TMT, and is above the 10
year average of 23,733 TMT. Despite the expectation of significant
increases in production in 2008/2009, supplies for 2008/2009 are
expected to increase by only 7%. This is due to the increase in
production not being able to off-set the historically low carry-in
stocks.

Despite increases in world demand, and despite the anticipated increase
in production, low carry-in stocks in 2008/2009 will likely limit
exports. Exports in 2008/2009 are expected to rise to 16,460 TMT, 8%
above 2007/2008 forecasted levels of 15,256 TMT. Most provinces now have
in place renewable fuel standards which will require a steady supply of
wheat for industrial usage in biofuels. These mandates are expected to
increase domestic consumption of wheat for industrial purpose by 2% in
2008/2009, compared to 2007-2008 levels. Of note is the fact that some
ethanol plants are having trouble contracting wheat for their plants and
are being forced to switch to alternative feedstock such as corn.
Increases in supplies will also result in a small increase in use for
feed purposes after the sharp decrease in 2007/2008 due to declining
Canadian livestock inventories and feeding and slaughter rates. Total
domestic consumption is expected to rise by 3% in 2008-2009, compared to
the previous year's level. Higher supplies are expected to result in
stocks increasing by 13% in 2008-2009.

# 

# BARLEY

## **2007-2008 Outlook**

In 2007-2008, exports of barley grain are expected to increase 58% above
2006-2007 levels, despite supplies, due to low carry-in stock, being
slightly below 2006-2007 levels. This spike in exports is being driven
by high commodity prices resulting from tight world supplies and an
increased world demand for feed barley. Feed consumption in 2007-2008 is
expected to fall by approximately 13% as the Canadian livestock industry
shrinks. The demand for barley products will remain strong resulting in
a 20% increase in FSI consumption in 2007-2008 from 2006-2007 levels.
The increase in domestic consumption is not enough to off-set the
decease in demand for feed resulting in total domestic consumption
decreasing by almost 10% from 2006-2007 levels. Low supplies due to low
carry-in stocks combined with a sharp increase in exports are forecast
to draw stocks in 2007-2008 down 13%.

## **2008-2009 Outlook**

March seeding intentions released by Statistics Canada in late April
suggest that area seeded to barley in 2008/2009 will decrease from
2007/2008 levels, despite the Canadian Wheat Board Pool Return Outlook
prices making barley one of the more attractive options this spring.
Harvested area is expected to decrease by 15%. This decrease may be
offset by normal yields, so that barley production in 2008-2009 is
forecasted at 10,200 TMT, down only 7% from the previous year's level of
10,984 TMT. Frustration on the part of some barley growers that barley
for export and domestic consumption remains under the control of the
Canadian Wheat Board may be playing a role in the reduced area seeded to
barley. Frustrations levels among some growers had reached the level of
talk of a "barley boycott" as it seems more and more unlikely that the
barley can be liberated through the legislative process in time for the
current crop year. The Canada's Minister of Agriculture, however, has
been looking at other possible options that could be done to liberate
the barley should the legislative process stall. Lower production levels
and historically low carry-in stocks are forecast to result in supplies
8% below 2007/2008 levels.

Lower supplies in 2008-2009 are forecast to result in a 23% decrease in
exports from the previous year's high export levels. Feed consumption is
expected to continue to decrease as well as the Canadian livestock
industry continues to restructure and downsize. Low supplies and higher
prices will also result in a reduced demand in barley for FSI use. Total
domestic consumption is expected to fall to 8,840 TMT, 5% below the
previous year's level. Despite a reduction in exports and domestic
consumption, stocks will be drawn down further as a result of the
forecasted decrease in production and low carry-in stocks.

# CORN

## **2007-2008 Outlook**

High supplies in 2007-2008 resulting from high production levels are
predicted to result in corn exports nearly doubling, jumping to 600 TMT
in 2007-2008 from 314 TMT in 2006-2007. High supplies also result in
higher domestic consumption on both the animal feed side and the
industrial use side. The steady demand for corn by Ontario's growing
ethanol industry is the main driver behind the increased FSI consumption
as well as the 13% increase in corn imports in 2007-2008. The high
supplies in 2007-2008 are predicted to result in a nearly 20% increase
in stocks from the previous year's level.

## **2008-2009 Outlook**

March planting intentions suggest that corn production in 2008-2009 will
decrease by 15% from the previous year's levels. As a result of this
decrease in production, imports will remain high. Lower production is
expected to result in a 10% decrease in supplies compared to the
previous year.

The reduction in supplies will limit exports which are expected to fall
back to average levels of 300 TMT. As a result of the decrease in the
Canadian livestock inventories and the reduction in feeding and
slaughter rates for both cattle and hogs, corn consumption for use in
feed in 2008/2009 is expected to decrease by 14% compared to the
previous year. A combination of high feed prices and low market prices
are making hog production unprofitable. Again, for more information on
the Canadian livestock industry, please see GAIN report
[CA8009](http://www.fas.usda.gov/gainfiles/200802/146293813.pdf). The
ethanol industry in Ontario continues to expand and recently, some wheat
based ethanol plants in Western Canada are switching to corn as
feedstock due to difficulty in contracting wheat due to high wheat
prices. As a result, the use of corn for industrial purposes is
forecasted to increase by 14%. The potential trade opportunities for
U.S. feedstock suppliers are limited however, since several of the
provincial mandates require that a significant percentage of the
feedstock originate in the province. The increase in industrial usage is
not expected to be high enough to off-set the reduction in domestic
usage for feed, resulting in total domestic consumption in 2008-2009
forecasted to decrease by 7% from the previous year's levels. Lower
supplies are expected to result in stocks being drawn down by 22%.

# 

# OATS

## **2007-2008 Outlook**

High supplies resulting from increase acreage and high yields in
2007-2008 are expected to result in a 3% increase in exports in
2007-2008 compared to the previous year. Domestic consumption is
expected to increase only marginally. Stocks in 2007-2008 are expected
to increase by 80% due to the increase in production and only small
increases in domestic consumption and exports.

## **2008-2009 Outlook**

High carry-in stocks in 2008-2009, as well as competition with higher
revenue generating crops such as canola and flax seed are expected to
result in a decrease in acreage seeded to oats. Oat production in
2008-2009 is forecasted to be 3,650 TMT, a 22% decrease from 2007-2008
levels. High carry-in stocks will also result in a nearly 45% decrease
in imports compared to 2007-2008 year levels. Supplies are forecasted to
decrease by 12% and may limit exports. Import demand from the U.S.
remains strong as oats are used as alternatives to other higher-priced
feed grains. Exports are forecast to decrease by 10% from the preceding
year's expected high levels. Domestic consumption is also expected to
decrease in 2008-2009 as the demand from the livestock industry shrinks.
Industrial usage for oats products is expected to decrease slightly in
response to decreased supplies. Stocks are forecasted to be drawn down
to a more average level of 700 TMT.

# BEANS (DRY)

## **2007-2008 Outlook**

Reduced supplies due to low yields in 2007-2008 are forecast to result
in a 17% decrease in exports, compared to year 2006-2007 levels. Low
supplies are forecast to result in a reduction in domestic consumption
of 15%. Low supplies are forecast to result in a 50% draw down of
stocks.

## **2008-2009 Outlook**

Area seeded to dry beans for 2008/2009 is forecast to decrease by 24%
from the previous year's levels due primarily to a shift to more
attractive options such as peas which are easier to grow and due to the
promises of good returns caused by strong world demand and a tightening
of world supplies. Production is forecast at 220 TMT, down from 277 TMT
in 2007/2008. Supplies are expected to decrease by 22% from the previous
year's level as a result of lower production and low carry-in stocks.
Exports and carry-out stocks are forecast to decrease due to lower
supplies caused by reduced production and low carry-in stock.

# 

# 

# PEAS (DRY)

## **2007-2008 Outlook**

## 

A 6% increase in supplies is expected to result in a 6% increase in
exports from 2006-2007 levels. In 2007-2008, domestic consumption is
expected to drop to 790 TMT from 846 TMT in 2006-2007. The sharp
increase in exports offsets the increase in production, resulting in
stocks being drawn down in 2007-2008.

## **2008-2009 Outlook**

March planting intentions suggest that area seeded to dry peas for
2008/2009 is forecast to increase due to high prices for peas resulting
from tighter world supplies and a strong world demand. Supplies are
forecast to increase by 3% as low carry-in stocks partially off-set the
6% increase in production. Production is forecast at 3,100 TMT for
2008/2009. Canadian imports of dry peas for 2008/2009 are forecast to
remain flat due to the increases in production being able to off-set
lower carry-in stocks. Exports are forecast to increase slightly due to
stable supplies and increased world demand. The increase in production
will help increase stocks in 2008/2009.

# LENTILS

## **2007-2008 Outlook**

## 

Low supplies in 2007-2008 due to low carry-in stocks and low yields will
limit export in 2007-2008. Exports are forecast to decrease 24% from the
previous year's level. Low supplies also result in a 7% decrease in
domestic consumption. Stocks are drawn down by 60% in 2007-2008.

## **2008-2009 Outlook**

2008/2009 Canadian lentil production is forecast at 650 TMT, a slight 4%
decrease from 2007/2008 levels. Total supplies in 2008/2009 are forecast
to decline by 13% compared to 2007/2008 levels due to low carry-in
stocks. Canadian imports for 2007/08 are forecast to remain flat at 10
TMT due to reduced domestic demand. While world demand remains strong
due to lower world stocks, exports are expected to decrease due to
limited domestic supplies. 2008/2009 exports are forecast at 560 TMT, a
14% decrease from 2007/2008 levels. Carry-out stocks for 2008/2009 are
forecast to further decrease due to low production and low carry-in
stocks.

# CROP PRICES FROM THE CANADIAN WHEAT BOARD

2007/08 Crop Year Pool Return Outlook (PRO)

[www.cwb.ca/db/contracts/pool_return/pro.nsf/WebPRIndex?ReadForm&CropYr=2007-08](http://www.cwb.ca/db/contracts/pool_return/pro.nsf/WebPRIndex?ReadForm&CropYr=2007-08)

Information on producer payments (historical)

[www.cwb.ca/public/en/farmers/payments/](http://www.cwb.ca/public/en/farmers/payments/)

# CANADIAN SEEDING INTENTIONS, March 31 2008 

[Statistics Canada -- Seeding Intentions of Principle Field
Crops](http://www.statcan.ca/Daily/English/080421/d080421b.htm)

# STATISTICAL TABLES

**Table 1: All Wheat**

![](media/image2.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

Statistical notes: HS codes for all wheat trade include 1001, 1101,
190219, 190230, 190240; conversion factor used for wheat products to
grain equivalency is 1.368.

**Table 2: Durum Wheat**

![](media/image3.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

Statistical note: Exports and imports for durum do not include products.

**Table 3: Barley**

![](media/image4.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

Statistical note: Barley trade numbers do not include products;
conversion factor used for grain equivalency of barley products (malt)
is 1.338688.

**Table 4: Corn**

![](media/image5.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

Statistical note: Corn exports and imports do not include products.

**Table 5: Oats**

![](media/image6.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

Statistical note: Oat exports and imports do not include products;
conversion factor used for grain equivalency of oat products is:
1.823051.

**Table 6: Beans (Dry)**

![](media/image7.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

**Table 7: Peas (Dry)**

![](media/image8.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

**Table 8: Lentils**

![](media/image9.wmf){width="6.498611111111111in"
height="3.3097222222222222in"}

# 

# 

# Find FAS on the World Wide Web

Visit our headquarters' home page at
[http://www.fas.usda.gov](http://www.fas.usda.gov/) for a complete
listing of FAS' worldwide agricultural reporting.