Thursday's Statistics Canada Principal field crop areas report, based on March 16 to March 31 surveys of 11,500 farmers, may be overlooked by many because of last night. There was a wild ride in the overnight trade which saw both oilseeds and grains post solid gains only to face heavy selling in early morning trade and move into negative territory.
Canadian farmers are expected to seed 23.846 million acres of all-wheat (including durum), down just 1.1% from 2015 and just slightly higher than the five-year average. This is close to the higher end of pre-report estimates, which suggested that between 21.5 ma and 24.2 ma acres would be seeded.
Included in this number is a 5.2% increase in durum acres to 6.120 ma, slightly higher than the expected range of 5.4 ma to 6 ma expected by the trade and above both the five-year and 10-year average acreage. This acreage will be close to topping the acreage planted in 2002 as well as reaching the highest level seen since 2000. Tight stocks of quality durum on the Prairies are a motivating factor, while durum's premium to spring wheat is another. Given AAFC's current forecast for 2016/17, Canada will see a build in stocks in the upcoming year.
Spring wheat acres are estimated to decline by 5.7% to 16.044 ma according to producer surveys, below both the five- and 10-year averages, while the lowest spring wheat area seeded in five years. Despite ending stocks which are estimated to be the tightest levels seen since the Dirty Thirties, producers are expected to scale back spring wheat area by 1.8% in Alberta, 3.4% in Manitoba and 9.6% in Saskatchewan. According to Statistics Canada data, this would represent the lowest spring wheat acreage planted in Saskatchewan (7.05 ma) since 1914 and marks a continued shift from cereals into pulse crops. Saskatchewan reached a high of 18.540 ma of spring wheat planted in 1967.
Winter wheat (remaining) was estimated at 1.682 ma, up 31.6%, with a 56% increase in Ontario to 985,000 acres based on favorable seeding conditions in fall while prairie acres increased 4.9% to 640,000 acres.
The next largest crop of canola surprised the market with an estimated planting acreage of 19.345 ma, down 3.7% from 2015. This would be a five-year low, while pre-report estimates indicated an expected range of 19.7 to 21.3 ma as compared to the 20.095 ma seeded in 2015.
While Manitoba growers are expected to leave acres unchanged from 2015 at 3.140 ma, Alberta growers are expected to reduce their acreage by 7.8% to 5.625 ma while Saskatchewan growers are expected to reduce plantings by 2.6% to 10.425 ma.
This estimate is bound to draw questions from market watchers. At the time of writing, November soybeans have gained over 75 cents in the April and November canola has gained close to $15/mt and near a test of psychological resistance at $500/mt, which may alter producer sentiment and actions. Current AAFC estimates for 2016/17 show ending stocks falling year-over-year in 2016/17, while using a planted acreage of 20.8 ma, or 1.5 ma more than today's estimate. While it may be difficult to determine the market's response to this report given overnight volatility, November soybeans gained as much as 23 3/4 cents overnight only to sink back into negative territory at the time of writing, while November canola continues to hold close to a $5/mt gain. The new-crop November/January canola spread has narrowed $.30 to a $4.70/mt carry, a modest sign of a less-bearish sentiment held by commercial traders.
As expected, the story this year in Prairies agriculture will focus on the rapid expansion of dry pea and lentil acres, in response to a poor winter crop in India following two consecutive droughts. Lentil acres are expected to expand 30.1% to 5.140 ma, a record high and within the 4.4 ma to 5.5 ma range seen in pre-report estimates. Record prices in 2015/16 combined with ending stocks which are expected to be just 4% of annual demand are providing incentive for this move, with lentil acreage to be expanded into non-traditional areas as well as tried by many first-time growers.
Dry pea acres are expected to jump by 16.3% to 4.280 ma, also a record high and within the range of expectations from 4 ma to 5 ma, as indicated in a Commodity News Service poll. Supply of available planting seed may be the limiting factor in determining planted acreage this year.
Flax acres are expected to fall by 32% to 1.115 million acres, well below expectations calling for a range of 1.5 to 1.8 million acres. This is below both five- and 10-year averages and a three-year low. This number may remain suspect and a swing of this magnitude would lead to extremely tight stocks in the upcoming crop year.
Oat acres are another casualty in today's data, with producers expected to cut acres by 10.9% to 2.972 ma. This is also below both five- and 10-year averages but within the 2.8 ma to 3.2 ma pre-report estimates. At the time of writing, the new-crop December oat future is showing a modest 1 3/4 cent gain, while the December/March spread has narrowed 1 1/4 cents to minus 6 1/4 cents, a less-bearish response by commercial traders.
Today's report showed Canadian corn acres are estimated to grow by 6.2% to 3.477 ma, a three-year high and higher than both the five and 10-year averages. Growers in Quebec are expected to increase acres by 4% to 939,000 acres, Ontario growers indicated acres to grow 4.6% to 2.150 ma and Manitoba acres will expand by 44% to 360,000 acres, a three-year high.
Canada's soybean acres are expected to fall for the second straight year, with March intentions indicating a 1.9% drop to 5.306 ma, although still well-above long-term averages. Both Quebec and Manitoba are expected to increase planted acreage, while Ontario and Saskatchewan are expected to see fewer acres seeded. It's interesting to see Manitoba acres expanded for the ninth consecutive year, accounting for close to 29% of the county's acres at 1.525 ma, from just 12% of the total acres 10 years ago. The largest year-over-year drop was seen in Ontario, with an expected 225,000-acre drop due to increased winter wheat plantings last fall and competition from corn.
Summerfallow acres are expected to fall to a record low of 2.16 ma to facilitate an expansion in planted acres, well-below the 5.4 ma average over the past five years and the 10-year average of 6.5 ma.
The attached chart highlights the latest seeded acre estimates for 2016 against the trend over the past 15 years on the Prairies for cereals (wheat, oats and barley), canola and the combined pea and lentil acres. Cereal acres have more or less stabilized in the 30 ma area, canola has stabilized in and around 20 ma while pea and lentil acres are climbing at close to 9.4 ma.
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