Canada Markets

Statistics Canada released its first look at the 2017/18 crop year with the Principal field crop areas, 2017 report released Friday. This report is based on producer surveys conducted between March 16 and 31, while this early report covers between 96% and 98% of the expected Canadian acreage, with data from smaller producing provinces omitted in this report.

At first look, this report suggests producers intend to seed a big crop, with summerfallow acres expected to fall to a record low of 1.765 million acres. A quick look at the total acres reported, including summerfallow acres, shows 2017 acres being 1.9 million acres higher than the 99.5 million acres seeded to all crops reported in 2016, which begs the question where this acreage came from?

Today's data resulted in a surprise when it comes to data reported for wheat. Producers plan to seed a total of 23.182 million acres, slightly higher than the top of the range reported by Commodity News Service in pre-report estimates and just .1% below the acreage planted in 2016. It's also just 1.2% below Canada's 10-year average for all-wheat acres.

Breaking this number down further, durum acres took the big hit, with acres expected to fall 16.9% to 5.145 million acres, the lower-end of the range of pre-report estimates. This reduction was widely expected, given the fusarium challenges faced in 2016 due to the wet growing season faced and the expected large carryout of low-quality stocks. Saskatchewan producers are expected to trim their durum acres by 18.8%, while Alberta producers are expected to reduce acres by 8.5%. It's interesting to note that United States producers are also expected to cut durum acres by 17% in 2017, the same number forecast for Canada overall.

Producers are bucking the trend when it comes to spring wheat acres, which are expected to increase by 8.2% from 2016 to 16.664 million acres. A year-over-year drop of 8.1% in Manitoba is offset by a 9.1% increase in Saskatchewan and a 16.1% increase in Alberta. This increase in spring wheat acres is consistent with early estimates from AAFC, which have reported a more modest 3.3% increase, with acres increasing with a shift away from durum and pulse crops. The weaker Canadian dollar gives the Canadian producer a different view of wheat returns than his U.S. counterpart.

Oilseeds may have stolen the show in this report, with record acres for both canola and soybeans expected. Canola acres are expected to increase by 9.9% to a record 22.4 million acres, the upper-end of the range of pre-report estimates. Manitoba producers are expected to trim their acreage by 1.7%, while Saskatchewan producers are expected to increase acres by 10.6% and Alberta producers by 14.6%. This outlook is perhaps consistent with the signals from the new-crop Nov/Jan futures spread, which has weakened $.90/mt this week. The November future has printed a bearish outside-day reversal bar in early trade, although can only be confirmed with Friday's close. Flax acres are also expected to jump 19.3% to 1.115 million acres, although remain 10% below the 10-year average.

Today's report also shows producers' growing enthusiasm for soybeans, with all producing provinces expected to increase production. Overall, a 27.2% increase in expected acres is reported, which includes an 11.4% increase in acres in Ontario to 3 million acres and a 34.6% increase in Manitoba to an expected 2.2 million acres. While the smallest producing province, Saskatchewan acres are expected to increase a whopping 204% to 730,000 acres. With close to 3 million acres expected in the west, this will certainly increase the call for crush capacity to be added in Western Canada. Quebec is expected to increase acres by 15.4% to 926,600 acres.

Corn acres are expected to increase by 12.8% to 3.75 million acres, also a record. Ontario producers are expected to increase acres by 9.6% to 2.22 million acres, a four-year high, while Quebec farmers are expected to increase acres by 9.7% to 976,100 acres, also a four-year high. Manitoba producers are expected to increase acres planted by 37.7% to a record 475,000 acres.

Estimates for Ontario will require a further look, with the province's winter wheat remaining acres down 120,000 acres from last year, while the year-over-year increase in soybeans is 310,000 acres and is 195,000 acres for corn, which does not add up at first glance.

Pulse acres on the Prairies are expected to drop sharply, with lentil acres down 25.2% from the record acreage planted in 2016 to 4.385 million acres, but are still the second highest acres ever planted. 2016 was a challenging year for lentil growers, while concern lingers over a trade dispute with India along with that country's expected record production, which could have a drastic impact on Canadian exports in the year ahead. Dry pea acres are expected to drop 5.9% to 3.989 million acres, also the second highest acreage planted to-date.

Oat buyers will breathe a sigh of relief with an expected 20.6% increase in oat acres to 3.419 million acres, an eight-year high and near the upper-end of pre-report trade expectations. This acreage is only slightly lower than the 10-year average. Solid returns for milling quality oats remain a driver for the continued interest in this crop.

Feed buyers, on the other hand, will grow increasingly nervous given an expected 8% drop in barley acres to 5.88 million acres, just slightly lower than the 2014 acreage and the lowest on record. Carryover of feed quality grain from 2016 will help supply needs in 2017/18.

In mid-morning trade, November MGEX spring wheat is down 1 1/4 cents, December oats are 2 1/4 cents lower and November canola is down $1.10/mt, having pared earlier losses.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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