The record-sized area planted to canola in the Statistics Canada acreage report released early Thursday caught more than just a few individuals in the trade by surprise.
“Even with flooding and excessively wet conditions for planting it was perceivable that canola area could have easily topped the 20 million-acre level and came that much closer to beating out the all-wheat projections,” said Ken Ball, a broker with Union Securities in Winnipeg.
Estimates provided by Statistics Canada early Thursday will be backtracked by the industry to reflect the extremely wet conditions in parts of the Prairies as well as continued flood conditions, he said.
“I think most industry participants will back off the canola acreage estimate by at least 20 per cent, if not more, to reflect those conditions,” he said.
Statistics Canada, in its acreage survey for the period ended June 3, pegged canola area in Canada at 19.799 million acres.
This compares with pre-report expectations that ranged from 17.25 million to 18.25 million and the StatsCan March 31 projection of 19.225 million. In 2010, actual canola area totalled 16.818 million acres.
“The acreage results for canola were definitely expected to have a bearish impact on prices,” said Ron Frost, an analyst with Frost Forecast Consulting of Calgary. “Even backing off those numbers to take into account area that ultimately did not get planted due to the excess moisture and canola fields that have been flooded out, that is still a lot of canola.”
Frost said the big question now facing canola, is how much area will actually make it to harvest.
“The large canola estimate appears to reflect the idea that producers, who were left with very little time to be eligible for crop insurance, took to the skies and threw as much canola onto their fields as they possibly could,” said Mike Jubinville, an analyst with ProFarmer Canada.
He felt that coming up with an appropriate production estimate, given the aerial seeding attempt, will be the next big question mark.
StatsCan estimated 2011 all-wheat area in Canada at 23.568 million acres. This compares with pre-report ideas of 21.5 to 23.5 million acres and the March 31 forecast from the government agency of 24.724 million. In the spring of 2010, all wheat area in Canada totalled 21.065 million acres.
Frost felt the durum estimate in the all-wheat projection will be significantly lower as will the forecast for spring wheat area.
“A lot of the area that has been hardest hit by the excess moisture is prime durum growing country and to tell you the truth durum plantings will have been lucky to hit the three million-acre level and not the 4.3 million seen in the StatsCanada projection,” Frost said. He felt that durum area needed to be backed off by at least one million to 1.25 million acres.
The estimates for oats and barley were also seen as being overly large, as here too some of the key growing areas of western Manitoba and eastern Saskatchewan were still dealing with excess moisture or were underwater still, Jubinville said.
Frost said if there had been some sort of weather break in early June, the projections for oats and barley probably would have been more in line.
Jubinville said that of all the numbers, barley was one of the few that should have some positive spinoff for prices.
StatsCan pegged 2011 Canadian oat area at 3.814 million acres, which compares with its March 31 forecast of 4.056 million and pre-report expectations of three million to 3.7 million. In 2010, Canadian oat area was 2.913 million acres.
StatsCan put Canadian barley area in 2011 at 7.139 million acres, compared with the agency’s March projection of 7.833 million and pre-report ideas ranging from 7.4 million to 7.75 million. In 2010, Canadian producers seeded 6.911 million acres to barley.
“If you backtrack the area off the barley estimate from the government agency, the potential for an extremely small barley crop exists,” Jubinville said.
Table 1. Recap of Statistics Canada’s planting estimates report for the period ended June 3, 2011. Pre-report expectations are provided for comparison purposes. Figures are in millions of acres.
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