By FarmLink Marketing Solutions
Recent numbers cited by Statistics Canada on planting intentions for Western Canada were reviewed recently by FarmLink Marketing Solutions, including higher numbers for spring wheat, particularly for soft white and Canadian Prairie Spring varieties.
April 21, 2008
Winnipeg, MB -If there was one slightly bearish surprise in today’s Statistics Canada 2008 Planting Intentions report it was spring wheat, coming in a million acres above most trade estimates. This contributed to early losses in Minneapolis wheat futures on the day. However, what the trade may not realize is that much of this increase won’t be in high-protein bread wheat, rather it will be seeded into higher-yielding and generally more profitable soft white and CPS varieties of mid-grade wheat well-suited to ethanol production.
By the time the crops are finished being planted by mid-June, this acreage breakdown will have shifted. There is likely to be less spring whet due to market declines, and more specialty crop acres as that sector responds to some much larger-than-expected shifts into more conventional crops.
In the case of canola, the market quickly shrugged off the Stats Can acreage projection to trade in line with U.S. markets. The forecast for seeded acres may have been at the low end of trade estimates, but the focus from here will be primarily on the weather. The moisture falling across the Prairies early this week is going to get the crop off to a better start than was previously thought, as dry conditions up until now had been a concern.
Figures that could be interpreted as bullish, as compared to trade estimates ahead of the report and/or traditional demand in 08/09, include barley, chickpeas, lentils, sunflowers, dry beans and flax. As expected, the specialty crop sector took the biggest hit to acres as well as barley due to regulatory uncertainty, and oats due to uncompetitive returns.
We didn’t see as big of a reduction as expected in summerfallow acres, or in land coming out of pasture and hay. This seems to indicate a slowdown in herd liquidation and a possible bottoming of prices in the livestock sector. Pasture and hay prices are also very, very high historically this year, as well as feedgrain input prices, which also support this theory.