Canada Markets

Agriculture Canada Releases 2013/14 Forecasts

By Cliff Jamieson , Canadian Grains Analyst

Agriculture and Agri-Food Canada released their monthly Canada: Outlook for Principal Crops Monday, which not only tweaked 2012/13 data but also included their first look at the 2013/14 crop year.

There were few significant changes made to old-crop grains. One of the largest shifts was a 300,000 metric tonne increase in barley exports, from 2 million metric tonnes to 2.3 mmt. This tightens the already low carry-out stocks to 700,000 metric tonnes and will certainly act to support barley prices through the balance of the crop year. Barley exports as of week 25 were at 785,000 mt, up 33.7% from last year's pace. Tight supplies of global feed grains have been friendly to feed exports, while shippers of malt barley have faced an uphill battle sourcing prairie stocks at levels which will allow competition with Argentina and Australia. Feed barley prices delivered southern Alberta are currently approaching $280/mt and are bound to firm through the spring road-ban season.

Carryouts for pulse crops such as peas, lentils and chickpeas have been increased from last month to reflect the challenges facing the pulse trade, both due to large inventories, such as the case in lentils, increased pulse production in the U.S. and stiff competition from competing countries, such as Australian chickpeas. The forecast for lentil carry-out has been increased by 70,000 mt to 700,000 mt, reflecting a 48% stocks-to-use ratio. The dry pea carry-out has been increased to 300,000 mt, an 11% stocks/use ratio, while chickpea carryout has been increased to 70,000 mt, a burdensome 66% stocks/use ratio.

As seen on the table below, Agriculture Canada's increases in wheat, durum, barley and soybean acres will offset losses in lentils and oats in the west. Cut-backs in lentil production make sense, given this year's burdensome stocks. Industry players have been hoping for a reduction of 500,000 acres or 20%, as compared to Ag Canada's 18% cut, in order to help out the lentil market, which is forecast to end the 2012/13 crop year with a 48% stocks/use ratio.

2013/14 Seeded Acreage
thousand acres
2012 2013 % Change
All Wheat 23,845 25,328 6
Durum 4,680 4,818 3
Wheat 19,165 20,509 7
Barley 7,406 7,784 5
Corn 3,543 3,459 -2
Oats 2,854 2,595 -9
Rye 356 284 -20
Canola 21,530 21,251 -1
Flax 981 865 -12
Soybeans 4,151 4,794 15
Peas 3,252 3,336 3
Lentils 2,515 2,051 -18
Dry Beans 309 210 -32
Chickpeas 200 173 -14
Mustard 336 346 3
Canaryseed 299 297 -1
Sunflowerseed 101 136 34

A drop in canola acres would be the first in 10 years. Is the call for a 1% cut in canola acreage enough? There has been plenty of coverage of the issues surrounding canola rotations being pushed too hard, while last year's disease issues and disappointing yield results could lead one to believe that canola acres could face an even larger cut. Oil World magazine reported to Bloomberg today that Canadian canola acres will be reduced 10% to 19 million acres in 2013/14, in favor of wheat, as compared to the 21.3 million acres called for in this report.

Should canola acres correct lower than estimated by Ag Canada, such as the 10% cut forecast by Oil World, then it is conceivable that wheat acres on the prairies may be higher than the 6% all wheat increase as projected by Ag Canada. The forecast for wheat acres is already the highest seeded acreage since the 2003/2004 crop year when 25.7 million acres were seeded. Given the lower costs involved with seeding wheat, the more favorable yields seen this past crop year, along with an increased level of comfort with the de-regulated marketing environment, this is one crop that could continue to gain favor over other cropping alternatives.

With so many potential game-changers hanging over the market, such as the impact from the U.S. drought, should it continue, along with the potential record South American crop, cropping plans may potentially remain in a state of flux as we move further into the spring.

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

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