Required Report - public distribution

**Date:** 7/31/2006

**GAIN Report Number:** CA6028

CA6028

**Canada**

**Grain and Feed**

**Quarterly Report**

**2006**

**Approved by:**

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

U.S. Embassy

**Prepared by:**

Joseph Dickson

**Report Highlights:**

For 2006/2007, total wheat production is forecast to decline slightly to
26.3 MMT as increased seeded acreage is not expected to be sufficient to
offset a return to trend yields. Durum production is forecast to decline
to 3.8 MMT, as both seeded acreage and yields decline. Barley production
is forecast to decrease to 10.9 MMT, also due to a decrease in seeded
acreage and yields. Corn production is forecast to decline to 8.8 MMT,
due to lower yields. Corn imports from the United States are forecast to
increase to 2.9 MMT due to lower domestic supply, strong demand for
animal feed and ethanol, and the removal of countervailing and dumping
duties on U.S. corn. Oat production is forecast to increase to 4 MMT, as
seeded acreage increases.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Ottawa \[CA1\]

\[CA\]

Table of Contents

[**QUARTERLY GRAIN AND FEED UPDATE
3**](#quarterly-grain-and-feed-update)

[Total Wheat 3](#total-wheat)

[Durum Wheat 3](#durum-wheat)

[Barley 4](#barley)

[Corn 4](#corn)

[Oats 4](#oats)

[STATISTICAL TABLES 5](#statistical-tables)

[Table 1: Wheat PDS 5](#table-1-wheat-pds)

[Table 2: Durum Wheat PDS 6](#table-2-durum-wheat-pds)

[Table 3: Barley PSD 6](#table-3-barley-psd)

[Table 4: Corn PSD 7](#table-4-corn-psd)

[Table 5: Oats PSD 7](#table-5-oats-psd)

[Recent Reports from FAS/Ottawa 8](#recent-reports-from-fasottawa)

# QUARTERLY GRAIN AND FEED UPDATE

The areas seeded to non-durum wheat, oats and corn have increased for
2006/2007, while areas for durum wheat and barely have decreased.
According to Agriculture Canada, crop development and condition is, in
general, normal. It is assumed that precipitation will be normal for the
growing and harvest periods and that quality will be normal. Trend
yields are assumed to both western and eastern Canada, as soil moisture
reserves are good in most areas.

## Total Wheat

Total Canadian wheat production for 2005/2006 increased by 3.5% to 26.8
million metric tons (MMT), as higher yields offset a decline in
harvested acreage. Increased production in Saskatchewan and Alberta
helped offset the decline in production in Manitoba. Poor harvest
conditions reduced the quality of the wheat crop, with approximately 18%
of the spring wheat crop in Saskatchewan expected to grade No.1. This is
significantly lower than the 10-year average of 53%, but higher than the
6% from the 2004/2005 crop year. The quantity of the overall wheat crop
falling into the top grades was below normal, but higher than in
2004/2005. As a result, there was a larger supply of milling quality
wheat. This is expected to translate into an increase in exports - from
14.8 MMT in 2004/2005 to 16.1 MMT in 2005/2006. Domestic consumption is
expected to increase slightly to 9.2 MMT, as the lower quality wheat is
utilized by the livestock industry. The large carry-in stocks from
2004/2005, combined with the jump in production, are expected to result
in another increase in 2005's ending stocks.

Total Canadian wheat production for 2006/2007 is forecast to decline to
26.3 MMT, despite an increase in acreage, as yields are expected to
return to trend levels. As a result of high carry-in stocks from 2005
and strong production, total wheat supplies are forecast to increase by
approximately 2.9% to 35.8 MMT in 2006. Exports are forecast to increase
by 16.5% to 18.7 MMT due to record production of 2.4 MMT in Ontario and
increased supply of high quality wheat in western Canada. In addition,
the removal of duties on Canadian hard red spring wheat exports into the
U.S. and the negative impact of the harsh winter on Russian winter
wheat, are expected to provide additional export opportunities for
Canadian wheat producers. Domestic wheat consumption is forecast to
decrease to 9.1 MMT as the use of wheat in livestock rations is
projected to fall. The increase in exports is forecast to offset the
decrease in domestic consumption and reduce wheat ending stocks in 2006
to 8.0 MMT.

Winter wheat production is forecast to increase across Canada. Total
Canadian acreage for winter wheat increased from 1.2 million acres in
2005 to 1.8 million in 2006. For the 2006/2007 crop year, Ontario winter
wheat seed acreage has increased to 1.1 million acres up from 830,000
acres in 2005, with Saskatchewan and Manitoba farmers also increasing
acreage significantly.

## Durum Wheat

Canadian durum production for 2005/2006 increased by 19.2% to 5.9 MMT,
due to increased harvested acreage and increased yields. Durum
production increased in all three Prairie Provinces, with production in
Saskatchewan increasing the most. Despite this, durum quality was
impacted by the challenging weather conditions at harvest time. In
Saskatchewan, approximately 26% of the crop is expected to grade No. 1,
which is higher than the 6% in the 2004/2005 crop year, but lower than
the 10-year average of 38 percent. High carry-in stocks and high
production resulted in a 25% increase in total durum supplies to 8.4 MMT
in 2005/2006. Durum exports in 2005/2006 are expected to increase to
approximately 3.8 MMT as a result of increased world demand and a larger
supply of higher quality durum in comparison to the 2004/2005 crop year.
Decreased production in North Africa has increased its durum import
demands. However, the forecasted increase in exports and domestic
consumption is not expected to be enough to offset the large supply of
durum, resulting in an approximate 30% increase to 3.3 MMT for the
2005/2006 ending stocks.

Canadian durum production is forecast to decrease in 2006/2007 by 35% to
3.8 MMT, due to a return to trend yields and a decline in seeded
acreage. The large ending stocks from the 2005/2006 crop year, combined
with production, will maintain total durum supplies at a high level.
Durum exports are forecast to decline in 2006 to 3.7 MMT, due to
increased production in North Africa and the EU, the major importing
regions. Total durum supplies are forecast to decrease to 7.1 MMT, but
the large ending stocks from the 2005/2006 crop year, combined with
production, will maintain supplies above the 10-year average. Due to the
forecasted decline in production, the 2006/2007 durum ending stocks are
forecast to drop to 2.4 MMT.

## 

## Barley

Canadian barley production for 2005/2006 declined by 5.3% to 12.5 MMT,
due to an overall decrease in yield and harvested acreage. In Alberta, a
slight increase in yield was not sufficient enough to offset a decline
in harvested area, resulting in a 4.6% decline in barley production to
5.6 MMT in the 2005/2006 crop year. Barley production in Manitoba
decreased 50.2% to 681,500 metric tons (MT), due to excessive moisture
in the province. Saskatchewan was the only bright spot on the Prairies,
with a slight increase in yield and harvested area, resulting in 6.7%
increase in barley production to 5.3 MMT in 2005/2006. However, the poor
harvesting conditions in Saskatchewan and Alberta resulted in a barley
crop that was below average in quality, thereby increasing the already
abundant supply of feed barley on the Prairies. Due to a decline in
2005/2006 barley production in the Black Sea region, 2005/2006 Canadian
barley exports are expected to increase. Lower U.S. barley production is
expected to benefit Canadian barley producers. Canadian domestic barley
consumption continues to increase, as livestock producers shift back
from feed wheat to feed barley and continued growth in the livestock
industry fuels feed demand. As a result, total domestic consumption for
2005/2006 is expected to increase to approximately 10.5 MMT. Due to the
increase in exports and domestic consumption and the decline in
production, barley ending stocks for 2005 are expected to drop to 3.0
MMT.

Canadian barley production in 2006/2007 is forecast to decrease by
approximately 12% to 10.9 MMT, due to lower yields and seeded acreage.
Yields are forecast to return to more normal levels and be lower than in
2004 and 2005. Total barley exports are expected to decline 14% to 2.2
MMT as lower feed barley exports are only partially offset by higher
exports of malting barley. Malt barley exports are expected to increase
due to greater demand from China and South America. Due to the removal
of duties on imported U.S. corn in April, 2006, demand for barley feed
from the Canadian livestock sector is expected to decrease and is
forecasted to reduce barley consumption in 2006 to 9.8 MMT. Despite
lower exports and domestic feed use, barley ending stocks are forecast
to decline to 2 MMT because of the decline in production.

## Corn

## 

Canadian corn production in 2005/2006 increased by 7.1% to 9.5 MMT, as a
result of overall higher yields and a slight increase in harvested
acreage. Higher yields in Ontario helped offset the decline in that
province's harvested acreage, driving production up 8.1% to 5.8 MMT.
Corn production in Quebec remained unchanged in 2005. Although Manitoba
corn acreage was once again negatively impacted by poor weather
conditions, production dramatically increased from 17,800 MT in 2004 to
211,500 MT in 2005 due to increased harvested acreage and higher yields.
Corn imports in 2005 are forecast to decline to 1.7 MMT, due to the
increase in production, large carry-in stocks, and tariffs on U.S. corn
imports, which were not removed until April, 2006. Total domestic
consumption of corn is expected to increase as the ethanol industry in
Ontario continues to expand production, drawing from this year's large
supply. The increase in production offsets the increase in feedstock
consumption and the decrease in imports leaving corn ending stocks
unchanged at 1.8 MMT.

Despite a forecasted slight increase in seeded acreage, Canadian corn
production is forecast to decline in 2006/2007 to 8.8 MMT as a result of
lower yields. Imports are expected to rise substantially by 69% to 2.9
MMT due to lower production, and strong demand for animal feed and
ethanol after the removal of duties on imported US corn. Corn ending
stocks are forecast to fall by 22% to 1.4 MMT due to increased domestic
demand and lower production. The 2006/2007 total supply of corn is
forecast at 13.6 MMT, a 4% increase due to higher imports offsetting
lower domestic production.

## Oats

Canadian oat production in 2005/2006 declined by 6.8% to 3.4 MMT as
lower yields offset the increase in harvested acreage. Production in
Manitoba was dramatically impacted by poor weather conditions, dropping
the production estimate to 440,700 MT, the lowest production estimate
since 1991 and a 51% decline from the 2004/2005 crop year. Lower
harvested acreage and a small decline in yield also reduced oat
production in Alberta to 859,000 MT. An increase in the harvested
acreage and record high yields helped drive Saskatchewan's oat
production to 1.7 MMT in 2005/2006, somewhat offsetting the decline in
production in Manitoba. Oat exports in 2005/2006 are expected to
increase slightly to 1.5 MMT due to higher US demand. Domestic
consumption is forecast to remain approximately at 2004/2005 levels at
2.1 MMT.

Canadian oat production in 2006/2007 is forecast to increase by 17% to 4
MMT, as a result of an increase in harvested acreage across the Prairie
Provinces, the expectation of the return of normal yields and
abandonment rates. Acreage and production numbers in Manitoba are also
expected to return to more traditional levels in 2006/2007, due to lower
production costs and stronger prices. Exports are forecast to rise to
1.8 MMT, due to increased import demand from the U.S. and the
expectation of increased supplies of milling quality oats. Domestic
consumption is forecast to remain steady at 2.1 MMT. 2006/2007 ending
stocks are forecast at 1.1 MMT a 22.2% increase, due to the larger crop.

# STATISTICAL TABLES

## Table 1: Wheat PDS

![](media/image2.wmf)

## Table 2: Durum Wheat PDS

![](media/image3.wmf)

## Table 3: Barley PSD

![](media/image4.wmf)

## Table 4: Corn PSD

![](media/image5.wmf)

## Table 5: Oats PSD

![](media/image6.wmf)

# 

# Recent Reports from FAS/Ottawa

  ----------------- ---------------------------------------- -------------
  Report Number     Title of Report                          Date

  CA6027            This Week in Canadian Agriculture, Issue 7/14/2006
                    17                                       

  CA6026            AMP 3^rd^ Quarterly Review               7/06/2006

  CA6025            This Week in Canadian Agriculture, Issue 6/22/2006
                    16                                       

  CA6024            This Week in Canadian Agriculture, Issue 6/9/2006
                    15                                       

  CA6023            This Week in Canadian Agriculture, Issue 6/2/2006
                    14                                       

  CA6022            Dairy Semi-Annual                        6/01/2006

  CA6021            This Week in Canadian Agriculture, Issue 5/12/2006
                    13                                       

  CA6020            This Week in Canadian Agriculture, Issue 5/5/2006
                    12                                       

  CA6018            This Week in Canadian Agriculture, Issue 4/20/2006
                    11                                       
  ----------------- ---------------------------------------- -------------