Wittal: AAFC acreage estimate won’t help canola prices

Our online grain markets columnist Brian Wittal welcomes feedback and information on market conditions in your area, such as current offering prices, basis levels, trucking premiums and special crops contracts. Contact Brian today.

March 9 — The stock markets were down today, which doesn’t set a good tone for the week ahead.

The U.S. dollar was up three-fifths of a cent and the Canadian dollar was down 0.45 cents to close at US77.15 cents. Crude oil was up $1.55, to close at US$47.07 a barrel.

Corn was up four to six cents a bushel, beans were down three cents to up three cents a bushel and wheat was down five cents to up two cents per bushel.

Canola was down $2 to up $1 per tonne, and barley finished up $3 to $5 per tonne for the day.

Very choppy and directionless trading was evident in the mixed closings by all grains.

No real good news to help the grains, with limited activity by traders as no one has a real interest or idea of where it was going, so they are staying out of the markets.

Agriculture and Agri-Food Canada has predicted that canola acreage will be 17.2 million acres in 2009, up 400,000 from the previous estimate, and up just over a million acres from last year’s acreage.

This is a large acreage estimate and will do nothing to support prices going into spring if the estimate is believed to be accurate.

News like this just confirms in buyers’ minds that they will not have to pay any higher prices than they are now to secure canola, with current stocks as high as they are and with anticipated acres being this high for the coming spring.

The unusual thing right now is that the grain companies are making sales to buyers but are having a hard time securing stocks to export, as producers keep the bin doors shut. So the only thing the companies can do is try to entice producers to deliver by offering basis premiums, which of late have been at unprecedented high levels.

If the companies continue to be caught short of stocks to ship, they will stop making further sales and this is not a good thing. We need to get rid of as much canola as possible to reduce our inventories before next harvest.

If we get through spring and we do have a large seeded acreage as is predicted, don’t expect canola futures or basis levels to be very friendly through to harvest. Anything more than an average yield will put our total canola inventories at burdensome levels, which should mean lower futures values until we get rid of the excess, and that could take a couple of years to do so.

The sunshine is all outside today; there is none in the grain markets right now, sorry!

That’s all for today. — Brian

— Brian Wittal has spent over 27 years in the grain industry, including as an elevator manager and producer services representative for Alberta Wheat Pool, a regional sales manager for AgPro Grain and farm business representative for the Canadian Wheat Board, where he helped design some of the new pricing programs. He also operates his own company providing marketing and risk management advice for Prairie grain producers. Brian’s daily commentaries focus on how domestic and world market conditions affect you directly as grain producers.

About the author



Brian Wittal

Brian Wittal has 30 years of grain industry experience and currently offers market planning and marketing advice to farmers through his company Pro Com Marketing Ltd.



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