Agriculture Canada's first look at Canada's seeded acres for 2018 suggests producers will not shy away from planting more acres, with planting of all grains and oilseeds forecast to rise by close to 2.5 million acres or 3.8% while the acres dedicated to pulses and special crops are forecast to fall by 2 million acres or 21%. With summer fallow acres estimated at 2.2 million in 2017, this report would require this area to fall for the third time in four years to a historic low.
As seen on the attached chart, the largest trend will be the shift away from pulses, with lentil acres forecast to fall by 27% or 1.2 million acres, while dry pea acres are seen falling by 21.5% or roughly 880,000 acres. Such a move would result in lentil acres falling to the lowest level in four years while dry pea acres could fall to the lowest level seen in seven years, tied to the current lack of export opportunities to India. Saskatchewan Agriculture's Market Trends indicates that current yellow pea bids are $2.23/bu or 24.8% below year-ago levels, while green lentils are $32/cwt or 49% lower and red lentils are $9.50/cwt or 35% lower than year-ago levels.
As seen on the attached chart, a number of crops are expected to realize a year/year increase in plantings. Soybean acres are expected to grow for the 10th time in 11 years to 7.4 million acres, with growth likely expected in the west. Canola acres are expected to grow by 1 million acres to a record 24 million acres. One interesting point is that despite a current forecast for an increase expected for 2017/18 ending stocks combined with high expectations for new-crop acres, the new-crop Nov/Jan spread narrowed slightly this week to minus $5.10/mt (January trading over the November). This is a neutral view of new-crop fundamentals based on the actions of commercial traders. Continued dry conditions on the Prairies may continue to support the new-crop contracts.
Producers are expected to increase the area seeded to wheat by 692,000 acres, or 4%, and durum acres by 256,000 acres, or 4.9%.
This early look at 2018/19 prospects suggests that world grain prices will remain pressured, given high levels of global supplies, while Canadian producers will continue to benefit from a weaker dollar relative to the USD. Overall grain stocks are forecast to fall in 2018/19, while this report has forecast stocks of durum, oats, canola and chickpeas to realize a year-over-year increase in stocks.
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