Last week's Dow Jones ICE Canada Weekly Outlook pointed to the idea that acres seeded to canola in Canada will be sharply higher in 2021, perhaps even a record. There will be a great deal of debate this spring leading up to Statistics Canada's survey results set for release on April 27, while based on March surveys. Of course, Prairie moisture could be a limiting factor this spring.
The current Agriculture and Agri-Food Canada estimates show a 4% or 840,140-acre increase in seeded acres to 21.6 million acres, the mostacres seeded in three years, which could be viewed as conservative given the continuous November contract that closed at $622.10/metric ton (mt) on April 5, relatively close to the $638/mt contract high reached in March, which is the highest November trade seen since the November 2012 contract reached a high of $654.60/mt in July 2012.
It would take a 2.231 million acre or 10.7% increase from the 20.782 million acres seeded in 2020 to reach the 23.014 ma seeded in 2017.
Looking at the chart (blue bars) for the past 10 years, the Nov canola/Dec spring wheat spread reached $274/mt on April 1, 2012, a year that saw canola acres jump by 3.186 million to the 22.176 million seeded that year. This was the highest canola/wheat spread seen over this 10-year period, while the jump in acres was the sixth consecutive annual increase in area that saw seeded acres jump from 13.055 million in 2006 to 22.176 million in 2012.
The black line with markers on the attached chart represents the year-over-year change in canola acres, as measured against the secondary vertical axis. What is interesting here is that over the past ten years, any annual increase in acres far surpasses the 840,000 acres currently forecast by AAFC for 2021. In 2011, this jump totaled 1.4 million, 3.2 million in 2012 and 2.2 million in 2017.
The most recent jump of 2.2 million acres realized in 2017 to reach the record 23 million acres followed four years where seeded acres fell year-over-year in three of the four years, or by a total of 1.392 million acres from 2012 to 2016.
It is interesting to note that seeded acres have fallen in each of the past three years (2017-2020), or by a total of 2.2315 million, which could set the stage for a potential sharp rebound in 2021.
While the current situation may support a sharp rise in acres, widespread precipitation across the Prairies may be required to support such a move.
Cliff Jamieson can be reached at email@example.com
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