Canada Markets

Saskatchewan Agriculture's Early Look at 2017 Crop Returns

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Here is a look at Saskatchewan Agriculture's early look at crop return over total expenses for selected crops across the brown, dark brown and black soil zones, given assumptions made. (DTN graphic by Nick Scalise)

The New Year brings with it an increased focus on 2017 crop prospects, with Saskatchewan Agriculture's Crop Planning Guide 2017 providing an early look, given a long list of assumptions.

This year's report differs from previous years as stated by the following:

"It targets the possible above-average yields, using a higher input system linked to recommended agronomic practices, including the use of certified seed, soil nutrients and pesticide selection. The latter is targeted at minimizing yield losses, while reducing the risk of development of pest (insect, plant disease and weed resistance)."

As well, calculations are not based on provincial average costs, while producers are encouraged to make their own calculations using blank worksheets or spreadsheets.

As seen on the attached chart, the government's calculations places both large green lentils and red lentils at the top of the list of returns. The return over total expenses ranges as high as $406.52/acre for large green lentils and as high as $254.41/acre for red lentils.

Despite the favorable calculations, time will tell whether producers will expand acres or even hold at current levels. Seeded acres are estimated to have increased 22% in 2016, which may not allow for a continued push higher, while many growers experienced varying results in their 2016 crop. India's pace of planting pulses in their winter crop is well-ahead of the average pace while production is expected to rebound after two consecutive droughts, which could weigh on price prospects. Price indications for new crop should be released this week with the CropSphere Conference in Saskatoon, while one industry representative suggested that many growers will be wary of new-crop contracts given experiences faced with the 2016 contracts.

Early indications also paint a favorable picture for oilseeds in 2017. The total return over expenses for canola show positive results across all three soil zones, ranging as high as $106.24/acre in the brown soil zone. Ending stocks for canola should fall for the third consecutive year although headwinds could arrive given a potential record crop of soybeans in Brazil for 2016/17 followed by yet another potential record crop in the U.S. for 2017/18. The current pace of demand for both canola exports and crush on the prairies lies ahead of year-ago levels.

Soybeans are also pointing to favorable returns given the assumptions made, with returns ranging as high as $82.47/acre on the dark brown soil zone. The growth in Canada's exports is making soybeans an increasingly popular choice for the eastern areas of the prairies, with indications that soybean acres may replace canola in some areas. The Canadian industry continues to be sheltered by the weak Canadian currency relative to the U.S. dollar, with approximately 50% of the estimated 2016/17 exports shipped in the three-months including the month of November, which could suggest that upward revisions in production may be in the cards.

Of the cereals shown, durum is showing positive returns in the brown and dark brown soil zones, ranging as high as $46.67/acre over total expenses. Once again, producers may be faced with difficult decisions related to their durum acres. 2016 acres were estimated to be the highest seen since 2000, while ending stocks are expected to grow by 127% to 2.5 mmt, largely low-quality stocks. The growing area affected by fusarium will be a key consideration, along with the availability of seed supplies.

Spring wheat, malt barley and feed barley are all showing negative returns given the assumptions made. Oats are showing a return of $21.05/acre in the black soil zone only, which may weigh on that crop's acceptance.

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DTN 360 Poll

Last chance! This current poll question, which will end on Tuesday, asks what you think is the top Canadian agriculture story of 2016. Please share your thoughts on this week's question, which is found at the lower-right side on your DTN Homepage. I encourage you to drop a line to cliff.jamieson@dtn.com to share your thoughts on this subject, with feedback to be compiled for a January piece for the Canada Markets blog.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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