Viterra sees more canola acres, moisture risk

Canada’s biggest grain handler expects “strong fundamentals” in its ag input business this year, based partly on more canola acres — but it grants that the Prairie spring thaw may have other plans.

Viterra on Wednesday posted improved results for its first fiscal quarter ending Jan. 31, largely on the counter-seasonal strength of its Australian business, and still pegs its global pipeline margin guidance at $33 to $36 per tonne for this year.

The company said it forecasts Canadian Grain Commission receipts for the six major grains in Western Canada to reach about 31 million tonnes for the 12 months ending Oct. 31 this year, up from its previous estimate of 30 million.

Seeded acres of canola should increase to about 18-19 million acres in 2011, versus about 16.8 million acres in 2010, the company said.

All that said, “these strong fundamentals may be somewhat tempered by an expected reduction in western Canadian seeded acreage in 2011,” the company wrote in its outlook.

“Management has not changed its view that seeded acreage will decrease by approximately three to four million acres below the 10-year average of 60 million acres,” Viterra said.

“However, excess moisture last year, coupled with above-average snowfall in certain areas of Western Canada this winter, does pose some additional risk, should flooding occur entering the spring planting period.”

More broadly, Viterra said it expects “continued export strength” out of North America due to strong demand created by supply difficulties in other grain-growing regions, “robust” global pricing for commodities and the continuing drawdown of Prairie carryover stocks.

The Regina-based company’s management expects that the Canadian Wheat Board’s estimated 17.4 million-tonne export target for wheat and barley out of Canada for the 2011 crop year is “achievable.”

Looking at its first-quarter (Q1) ledger, Viterra noted that along with a record crop in South Australia, higher fertilizer pricing and strong margins from food processing in North America drove its gross profit and net revenues from services to $412 million compared to $276 million in its 2010 Q1.

The company on Wednesday booked Q1 after-tax profit of $99.6 million on gross revenues of $2.471 billion, up from $10.7 million on $1.785 billion in the year-earlier period.

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