CNS Canada — After predictions of record canola area and a drop in pulse acres, traders and analysts are doubtful of Statistics Canada’s predictions for smaller canola acres, much larger wheat acres and only minor reductions in pulse acres.
“It’s unusual for everybody to just be this out of whack on this report,” said Ken Ball of PI Financial in Winnipeg.
“I think the chatter’s been circling for quite a while that canola acres were going to be up a little bit and probably wheat acres up a little bit and then other things down a little bit. But it didn’t come out that way at all.”
In Statistics Canada’s principal field crop areas report, released Friday, canola acreage for 2018-19 as of March 31 is predicted to be at 21.4 million acres, compared to pre-report trade estimates that all came in above last year’s record of 23 million acres.
StatsCan predicts pea acres at 3.9 million, compared to trade estimates of 3.2 million to 3.7 million, and lentil acres at 4.1 million, compared to pre-report estimates of three million to 3.9 million. Canadian farmers last year seeded 4.1 million acres of peas and 4.4 million acres of lentils.
While canola acreage is set to fall, wheat acreage will grow, according to StatsCan’s estimates. Wheat area is predicted to be at 25.3 million acres, compared to pre-report estimates of 20.5 million to 24.2 million acres and the year-ago level of 22.6 million acres.
The growth is estimated to come from spring wheat acres, which are predicted to jump by 15.4 per cent, to 18.2 million.
Most traders and analysts were shocked by the numbers. When contacted before the report, almost all had pegged canola to hit a record acreage. As farmers are expected to step back from pulse crops over trade uncertainty with India, traders had foreseen an increase in wheat acres — but not by as much as StatsCan predicted Friday.
“I’m a little bit skeptical that we’re going to see an actual decline in canola acres,” said Jonathon Driedger, a senior market analyst with FarmLink Marketing.
“I think that the feedback we get from our clients, from other people in the country, anecdote reports from seed sales reps and so forth, is that I think that we’re all but certain to see an increase in canola acres.”
Market response to the report was muted, with many traders being cautious due to not fully believing the report. Usually, according to Mike Jubinville of ProFarmer Canada in Winnipeg, when canola acreage decreases it is supportive to the market and contracts will jump by $10.
“The combination of not believing this number and the global marketplace under pressure means canola’s really having trouble responding bullishly to this,” he said.
If the lower canola acreage does come to fruition it will be good news for the market. Fewer canola acres will mean less carryover for canola stocks and provide a cushion for the marketplace.
However, Ball said, the prediction for a spring wheat acreage increase may have been based on the U.S. Department of Agriculture’s (USDA) acreage predictions.
In USDA’s prospective plantings report released last month, U.S. spring wheat acres were pegged to be at 12.7 million, compared to 11 million last year.
“Obviously growers are leaning back, possibly due to weather considerations, on a good part of the wheat areas,” Ball said. “At the time when these decisions were being made it was looking pretty dry in most of the spring wheat areas and they may have been leaning towards going back to more spring wheat acres.”
Overall traders and analysts say they expect the acreage numbers to be revised closer to their predictions when StatsCan releases new information in June.
— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow her at @AshleyMR1993 on Twitter.
Table: A recap of Statistics Canada’s 2018-19 acreage forecast as of March 31, 2018, in millions of acres, plus traders’ pre-report estimates for comparison.
|Canola||23.500 – 24.300||21.383||22.997|
|All wheat *||20.500 – 24.200||25.259||22.391|
|Durum||4.800 – 5.700||5.777||5.205|
|Barley||5.250 – 6.800||6.059||5.766|
|Flaxseed||0.900 – 1.200||0.989||1.040|
|Oats||3.000 – 3.400||3.148||3.200|
|Peas||3.200 – 3.700||3.868||4.093|
|Lentils||3.000 – 3.850||4.050||4.405|
|Soybeans||6.800 – 7.850||6.452||7.282|
* – “All wheat” includes spring wheat, durum wheat and winter wheat remaining after winterkill.