(Resource News International) — Canadian farmers seeded more canola than they originally said they intended to, bringing Western Canada up to a record 15.812 million acres, according to Statistics Canada’s updated 2008 estimates of principal field crop area.
“It seemed like almost nobody thought there would be any big shifts but canola is a surprise,” Ken Ball, a Winnipeg broker with Union Securities Ltd., said regarding StatsCan’s estimates as of June 3, released Tuesday.
Despite the reported increase in canola acreage, however, the new number was not seen by industry sources as overwhelmingly bearish for the canola market as poor weather conditions are expected to limit the overall production number.
“If we look at the condition of the Saskatchewan canola crop, I doubt there will be any more production. I think there is at least half to three quarters of a million, maybe even a full million, of questionable canola acres out there and it remains to be seen whether they will make it or not because of frost, dryness, poor germination and everything else,” said Ron Frost, a marketing expert with Pike Management Group in Calgary.
Ball agreed, saying while the number will likely have an initial bearish impact in the market, it will not radically alter the overall canola situation in Canada.
“In a way, farmers might be lucky that crop conditions haven’t been perfect, otherwise we would have a big price reaction, but the acreage number may not produce a lasting reaction this way,” he said.
A broker who did not wish to be named said the canola number would weigh on prices throughout the year and said it would be good for crush margins.
Meanwhile, the all-wheat acreage number was little
Durum acres rose to 6.1 million, up from the March figure of 5.9 million acres.
“I would have thought we would have gotten a bit closer to 6.5 for durum as opposed to the number that we ended up getting,” Frost said.
He added, however, that he would not be surprised to learn in the fall that more area had actually been seeded to durum than was reported by StatsCan.
Other than the canola figure, the barley acreage number also surprised the trade. The barley figure was lowered to 9.072 million acres in the June report, down from the original March estimate of 9.332 million acres. Pre-report estimates had called for a slight increase due to the fact that barley prices rose around seeding time and were thought to have tempted more acres.
“In a year where we already have problems in the U.S. corn crop and barley supplies are already very tight, this is a very low barley acreage number,” Ball said. “We’re going to see barley prices come up. They have already moved a little bit higher with corn but certainly now barley is looking cheap next to corn and supplies are pretty tight.”
Area seeded to oats came in at 4.382 million acres, down from the March estimate of 4.485 million acres.
Frost expressed reservations about StatsCan’s oat acreage number, saying he would not be surprised if the actual figure is closer to 4.6 million or even 4.7 million acres.
“Around Saskatoon and Lloydminster, right across that whole strip, we believe it was dry enough and the germination poor enough that some extra cereals acres went in. That is certainly an area where additional oats acres could have gone in,” Frost said.
Ball said he was mildly surprised with the drop in oat acreage and said it would be supportive for prices.
Producers also seeded more flax that they had originally
planned to. Acres rose to 1.51 million acres, up from 1.47 million acres expected in March. Flax prices have been steadily rising in Western Canada and recently hit new highs of $20 per bushel. That is thought to have led to the extra seeded area.
Other figures that surprised some industry sources were the pea and summerfallow acreage numbers.
Area in summerfallow was reported at 5.785 million acres, down from 6.85 million acres reported by StatsCan in March.
“I don’t know that the rains came quick enough really to justify cutting back acreage by a million acres but the numbers are what they are,” Frost said.
Industry sources had thought producers would seed more area to peas, given their nitrogen fixing ability and fertilizer prices now at all-time highs.
Statistics Canada acreage estimates as of June 3, 2008, including pre-report estimates, March 2008 and 2007 numbers (millions of acres).