Canada Markets

Last week's USDA estimate of 2016 seeded acreage of corn at 93.6 million acres was perhaps the most talked about number from the March 31 report. It was far higher than the average pre-report trade estimate and even well-above the highest pre-report estimate.

Of course, it's an early estimate and lots could change and in some minds, probably will. DTN Contributing Analyst Alan Brugler points out that actual acres seeded to corn were lower than the March intentions in 13 of the past 20 years, while have been below the March estimates in five of the past six years.

Another factor brought up by Brugler is the soybean corn ratio. Looking back in time, the November soybean/December corn ratio traded as low as 2.11:1 in September, while closing at 2.52:1 in Monday's trade, with a ratio over 2.5 favoring soybeans over corn.

Of interest is how Canadian farmers react in any given year, as compared to the intentions of U.S. producers. Our earliest estimates from Agriculture and Agri-Food Canada suggest that Canadian corn acres will fall 3.8% to 3.151 ma, with stocks expected to be at near-record levels and higher forecasts for winter wheat acres in Ontario supporting the estimate.

Statistics Canada is due to release its Principal Field crop areas April 21, which provides an early forecast of seeding intentions based on March interviews. The attached chart looks at the percent change seen in the Prospective Planting estimate in the U.S. compared to the actual acres planted in the year prior (blue bars) plotted against the percent change in Statistics Canada's March intentions estimate versus the actual acres seeded the year prior.

In the previous 10 years (2006 through 2015), Statistics Canada's Principal field crop areas report showed Canadian farmer's intentions followed that of the U.S. producer in seven of the 10 years, or 70% of the time. Canadian producers' intentions and their U.S. counterparts showed intentions to increase corn plantings in five of the seven years, including 2007, 2010-to-2013 and in 2014. In 2008 and 2014, Canadian producers showed intentions to plant less corn in the Statistics Canada report, as had the U.S. producer shown in the March 31 report.

Also of interest, as seen on the attached chart, in six of the seven years where Canadian producers' intentions moved in tandem with the U.S. data, the percentage change seen from year-to-year in Canada exceeded that seen in the U.S. in six of the seven years (red bars exceeding blue bars). For example, in 2007, early estimates in the U.S. showed intentions of farmers increasing acres by 15.5% from the previous year, while early estimates in Canada showed the potential for a 26% hike. The following year, early intentions in the U.S. showed farmers looking to cut corn acres by 8.1%, while Canadian producer's March intentions show prospects to cut by 12.6%. This is largely explained by the sheer size of the U.S. crop relative to that seen in Canada.

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

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