Canada Markets

Canada Farmers Shift from Canola to Wheat

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Statistics Canada released its June Principal field crop areas report this morning. The largest news this spring is the shift from canola to wheat, although many felt the earlier March numbers were over-stated, which proved to be the case as today's report reduced the extent to which this switch occurred.

All-wheat seeded acres were reported at 25.906 million acres, within the range of pre-report estimates. While this is lower than the March estimate of 26.718 ma, this acreage is still 9.3% higher than the 2012 acreage of 23.706 ma. This represents an almost 23% increase in acreage since the recent low of 21.073 ma seeded in 2012, and the largest acreage planted since 2001 when 26.972 ma were planted.

The largest jump seen was in spring wheat, with total acres jumping 12.6% to 19.073 ma. While hard red spring acres increased 7.4% to 16.245 ma, gains in some of the smaller classes of wheat were more pronounced, with the Canada Prairie Spring class increasing 47% to 962,000 acres, the Extra Strong class increasing 76% to 155,000 acres and the Soft White Spring class increasing 75% to 1.186 ma.

Durum acres were reported at 4.880 ma, just below the trade estimates that ranged from 4.9 ma to 5.1 ma. This number is also below the March intentions of 5.105 ma although still remains above the 2012 acreage of 4.680 ma. This is understandable given the adverse weather received in southern Saskatchewan and the resulting shift to shorter-season crops.

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Barley acres were at the lower end of trade-expectations at 7.175 ma, which is just slightly below the March intentions and a 3.1% drop from last year's 7.405 million acres. Barley acres have fallen in five of the last six years, to the detriment of the feed industry and malt industry. At 3.371 ma, the seeded acres for oats were within trade expectations, almost identical to the planting intentions reported earlier this spring and reflect an 18.1% increase from the 2.854 ma planted in 2012. This is the highest seeded area for oats since 2009.

Another highly anticipated acreage reported in this morning's report was the canola acreage. While canola acres are reported to have slid 8.3% to 19.738 ma in 2013, the reported acreage is 605,000 acres higher than reported in the March intentions report. A number of factors may be behind this reduction in acres, including challenges faced in the 2012 growing season along with the need to move rotations back into line.

Assessing harvested acres at 98% of planted acres, an average yield of 34.21 bu./ac across the country will be required to meet the Canola Council of Canada's target of 15 mmt of production by 2015, one year early. Canada's average yield in 2012, as reported by Statistics Canada, was 27.7 bu./acre, while the average over the four years from 2008 to 2011 was 34.4 bu./acre. With cooperation from the weather, this may be an achievable target.

Seeded acres for lentils, at 2.455 ma, were reported to be 2.4% below 2012's planted acreage although remain well above the 2 ma that many were thinking earlier on. Strengthening in lentil bids over the spring made lentils a more suitable choice, with the bulk of the expansion to be seen in the red lentils. Dry pea acres were announced at 3.370 ma, which is almost identical to the March intentions and just .9% higher than 2012.

Corn acres grew for the fifth year to a record 3.645 ma, up 2.9% from last year. Quebec's corn acreage is expected to grow 6.6% to 1.019 ma, while Ontario's corn acreage is expected to dip 1.6% to 2.190 ma. Manitoba's corn acreage is estimated to increase 21.7% to 365,000 acres. Soybean acres are also estimated to hit a record planted acreage, at 4.589 ma, up 10.5% from 2012. The biggest increase is to take place in Manitoba, with an increase of 35.6% to 1.1 million acres, a number that some are already questioning. Saskatchewan's planted acres of soybeans have been reported by Statistics Canada for the very first time, with 170,000 acres said to be planted in 2013.

One number which may have posed a surprise is the acres of summer fallow reported. At 3.495 ma, this number dipped slightly from the March intentions and was down 22.1% from 2012. This appears unlikely given the probability of abandoned acres in the southern areas of Saskatchewan and Manitoba, although very well could have been a result of the timing of the questionnaire, as the data was collected from May 27 to June 10, with later rains perhaps affecting the reported data.

Given the fact that the report largely mirrored expectations, there was little market impact as a result of today's report, although new-crop canola futures are facing pressure due to a combination of the acreage report along with favorable growing conditions across much of the Prairies. MGEX wheat futures are facing light selling pressure, with better-than-expected winter wheat yields in the U.S. weighing on the overall wheat market.

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

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