Canada Markets

The Continued Growth of Western Soybeans

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The red line shows the trend in Canada's soybean acres for the 2001-to-2015 period, as well as the StatsCan March intentions for 2016. The black line shows the trend in Manitoba while the brown line represents the trend in Saskatchewan, with early indications showing 5.3 million, 1.53 million and 245,000 acres to be planted in 2016, respectively, as measured against the primary vertical axis. The blue bars represent the rapidly growing share of western soybeans as a percentage of Canada's total acres, as shown on the secondary vertical axis. (DTN graphic by Nick Scalise).

Thursday's Statistics Canada Principal field crops areas report, which gives a first glimpse of farmers' intentions for the upcoming crop year, shows the country's soybean acres falling for the second consecutive year to 5.306 million acres, down from a high reached in 2014 of 5.562 ma.

An expected dip in seeded acres is expected in Canada's largest producing province of Ontario, where acres are expected to drop by 225,000 acres or 7.8%, while Saskatchewan acres are expected to fall by 25,000 acres or 9.3%.

In contrast, Manitoba acres are expected to grow for the ninth consecutive year to 1.525 ma, according to March surveys conducted. Since 2001, or the first year that Statistics Canada reported soybean data for Manitoba, acres have grown in all but three years. Simple compound annual growth calculations show that Manitoba's acreage has achieved a compound growth rate of 24.8% over the past 15 years, while overall Canadian acreage has grown at a much slower rate of 4.8%.

To put Manitoba's acres into perspective, a quick look at the USDA's Prospective Plantings report would indicate that of the 2016 planting intentions for the 31 States reported, 17 States are indicated to see a larger area than Manitoba while 14 are suggested to plant a lower area. The average acreage of the 17 larger producers is 4.5 million acres, ranging as high as 10 million acres in Illinois.

An interesting trend is seen on the attached chart in the trend of the western acreage as a percentage of Canada's total acres, as indicated by the blue bars. In 2001, the first year Manitoba's 50,000 acres were reported by Statistics Canada, the Western Canada acreage accounted for just 1.9% of the total 2.673 ma grown in the country. By 2015, the combination of Saskatchewan and Manitoba acres of 1.655 ma accounted for 30.6% of Canada's total while the March intentions suggest that western acreage will make up 33.4% of the Canadian total in the upcoming growing season.

The same trend can be seen in the shift of exports to Pacific terminals in order to feed Asian demand. According to CGC data, licensed exports in 2013/14 totaled 2.317 mmt, of which 435,500 mt or 18.8% was shipped from Pacific terminals. In 2014/15, the volume shipped from the west coast grew to 606,100 mt or 26.3% of the total while current data as of week 37, or the week ending April 17, shows 1.064 mmt has been shipped, or 36% of the total volume.

The question which continues to surface is when will prairie processing follow? Past studies have shown that a 2,000 mt/day operation should be feasible in Manitoba, while based on 2014 production data. Continued growth in output could make this more attractive, although off-shore demand also continues to trend higher.

It's interesting to note that Western Canada's first major canola crushing plant was opened at Lloydminster, Saskatchewan in 1975, while a combination of 3.7 million acres existed in Alberta and Saskatchewan at the time.


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