In advance of Friday's Principal field crop areas report to be released by Statistics Canada, the first look at Canada's upcoming 2017/18 crop year, here is a look at the impact that past reports have had on futures trade on release day for selected crops. This report is based on producer surveys conducted in March while reported in late April.
Over the past 10 years (2007-2016), the December MGEX spring wheat future closed in a range from 32 cents/bushel (USD) lower to 13 cents higher on Canada's April report day, averaging 5 cents or .6% lower over the 10-year period. This future finished lower in seven of the 10 years, while finished in the direction one would expect given the year-over-year change in Canada's spring wheat acreage in six of the 10 years. For example, one would expect new crop trade to finish higher given a year-over-year decrease in acres, and vice versa.
Over the past 10 years, the November canola contract ended 5 cents/bu. CAD ($2.25/mt) or .3% lower on average on the day March intentions were released. The range of movement on report day was from $26.20/metric ton lower to $3.90/mt higher. The market ended unchanged on one year, ended higher on five years and lower on four years of the 10-year period. Like wheat, the canola market closed in the direction one would expect given the year-over-year change in acreage reported in six of the 10 years. The 2008 report stands out as a sharp move in the market, with Statistics Canada reporting a modest increase in expected acres of .4% from 2007, or 50,000 acres to a record 14.7 million acres that led to a $26.20/mt or 4% sell-off. The market reclaimed most of this loss the next day.
Of the three commodities looked at, the oat market reacted the least upon the release of Canada's planting expectations. Over the past 10 years, the December oat contract closed 1 1/2 cents or .5% lower on average. The range of movement was 6 cents/bu. lower to 12 cents higher, closing lower on eight of the 10 years looked at, higher on one year and unchanged on one year. The oat market closed in the direction one would expect given the year-over-year change in the estimated seeded acres reported by Statistics Canada in five of the 10 years in question.
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There are many factors coming into play that can move the market on any given day. On average, new-crop futures trade is not highly correlated to the release of Canada's seeded acre estimates. Trends in seeded acres are often priced into the market prior to the release of the report, while the accuracy of survey-based reports can also lead to skepticism of the results.
This report will be released at 7:30 AM C.T.
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