Canada Markets

Statistics Canada's 2018 Field Crop Survey was conducted between March 2 and March 29. The agency has introduced methodology changes that begin with this report, one of which includes the use of electronic questionnaires as the main source of data collection. One noticeable change is that this survey was undertaken earlier than normal, with data collected from March 2 through March 29, while the last two years have seen data collected from March 16 to March 31, closer to spring seeding.

When compared to pre-report estimates supplied by Commodity News Service and carried in DTN's Winnipeg Pit Talk earlier in the week, today's report could be summed by higher-than-expected dry pea and lentil acres, lower-than-expected oilseed acres and higher-than-expected all-wheat acres to be seeded in Canada in the 2018/19 crop year. This report would suggest an overall shift from oilseeds and pulses such as peas and lentils to cereal crops.

Given today's estimates, Canada's all-wheat acres will reclaim the top spot among Canada's crops, after canola acres exceeded all-wheat for the first time in 2017. Canada's all-wheat acres are expected to jump 12.8% to 25.259 million acres, 5% higher than the five-year average and the largest all-wheat acres seen in five years. A year-over-year drop in winter wheat acres has been easily offset by an expected increase in both durum and spring wheat acres.

The all-wheat estimate of 25.259 ma is well-above the Commodity News Service pre-report estimate that ranged from 20.5 million acres to 24.2 million acres.

Canada's spring wheat acres are expected to climb by 15.4% to 18.241 million acres. This would be the largest spring wheat acres planted in five years, 7% higher than the five-year average. This is consistent with the expected 15% increase estimated by the USDA for spring wheat acres in the United States. Double-digit increases are expected across all three prairie provinces, with the largest move of close to 1.2 million acres or 17.2% estimated for Saskatchewan. The MGEX spring wheat market is trading lower on Friday morning, while DTN comments pointing to weakening new-crop futures spreads over the past two weeks, as commercial traders show an increased bearish sentiment.

Durum acres are estimated at 5.777 million acres, up 11% from 2017 and 7.5% above the five-year average. Once again, this estimate is just slightly higher than the range of pre-report estimates, ranging from 4.8 to 5.7 million acres. This estimate may be questioned over time, given the later spring planting window, pressure on mill bids from the U.S., continued trade challenges faced with Italy and overall exports that lag the five-year average pace. This is also conflicting with the move made by U.S. producers, with the USDA forecasting a 13% drop in acres south of the border.

Perhaps the largest surprise seen in this report was a drop in both canola and soybean acres to levels below the lowest trade estimate, when a significant jump to a fresh record was expected for canola. Given this response, one would have to conclude that the drier area of the Southern Prairies along with the barrier faced by rotations that have been pushed in many areas might have caused producers to shift towards cereals.

Canola acres were estimated at 21.383 ma, down 7% from 2017 and just .9% higher than the five-year average, despite growing global demand for oilseeds. This compares to the pre-report estimate that ranged from 23.7 million acres to 24.3 million acres, with a substantial hike discussed in market commentary for months. Today's report seems to have been heavily discounted by the market, with the new-crop November contract trading down as much as $2.10/metric ton following the report, with the new-crop Nov/Jan spread mostly neutral despite the new-crop acres estimated 2.3 million acres below the lowest trade estimate reported by Commodity News Service. As well, as of April 26, November canola open interest was reported at 93,182 contracts, 28,202 contracts higher than the same date in 2017. Spring storms have improved soil moisture over southern Saskatchewan in both March and April that have also altered planting decisions made since the report data was collected.

While Manitoba growers are expected to hold the line on canola acres, Saskatchewan growers are expected to reduce acres by 1.3 million acres, while Alberta is expected to reduce acres by 280,000 acres.

Soybean acres in Canada were also estimated below the lowest trade estimate, with 6.452 million acres expected to be planted, down 11.4% from 2017's record acreage but still 12.5% above the five-year average. This is below the 6.8 million acres to 7.85 million acres range of pre-report estimates, following a significant growth in acres that has seen acres increase in eight of the past nine years, from 2.9 million acres in 2007 to 7.282 million acres in 2017.

It is interesting to note that acres are expected to fall in all major producing provinces in 2018, while seeded acres have been reported in Alberta for the first time ever at 21,000 acres. The mature market of Ontario is expected to see acres slip by a modest 55,000 acres to 3.020 million acres, accounting for approximately 47% of the total acreage. Acres are expected to fall by 120,500 acres in Quebec, by 330,000 acres in Manitoba and by 346,000 acres or 41% in Saskatchewan.

At the same time, growers are expected to expand acres dedicated to corn. Canada's corn acreage is expected to grow by 5.1% to 3.758 million acres, which would achieve a record acreage in the country. Acres in Quebec are expected to jump by 76,000 acres to 1.015 million acres, Ontario acres are expected to increase by 50,000 acres to the highest in five years at 2.170 million acres, while Manitoba acres are expected to jump by 45,000 acres to a record high of 455,000 acres. A delayed start to spring planting in eastern Canada could lead to a shift in planting intentions from corn to soybeans.

Producers are expected to fewer acres to oats, with acreage estimated at 3.148 million acres, down 1.6% from 2017 and roughly equal to the five-year average acres seeded. This falls within the 3 million acres to 3.4 million acre range of pre-report estimates.

Barley acres are expected to jump from the record low reached in 2017 to 6.059 ma, up 5.1% from 2017 while 6.2% below the five-year average. This also falls within the range of pre-report estimates at 5.25 million acres to 6.8 million acres. Later spring seeding along with the spike in prices seen this spring, with definite interest going forward as indicated by reported trades into Southern Alberta for January-through-March of 2019 could easily result in higher than expected barley acres seeded this spring.

Also in conflict with pre-report estimates was a lower-than-expected shift away from dry pea and lentil acre. Dry pea acres were estimated at 3.868 million acres, down 5.5% from 2017 and the lowest acreage seeded in three years. This is higher than the range of pre-report estimates, shown at 3.2 million acres to 3.7 million acres, while early AAFC estimates pointed to a 3.2 million acres estimate used in its supply and demand tables.

Lentil acres were estimated at 4.05 million acres, also the lowest in three years, down 8.1% from 2017 and above the range of 3 million acres to 3.85 million acres pre-report estimate. Early estimates from AAFC suggested 3.2 million acres would be seeded. This would suggest that traditional pulse growers will stick with their traditional rotations, while industry warnings that trade sanctions introduced by India are short-term in nature and that country will need to return to the export market to meet their growing needs.

One pulse crop that showed significant prospects was chickpeas, with acres expected to jump by 116.4% to a record 346,000 metric tons, driven by an aggressive export program to the U.S. and the tight ending stocks forecast for 2017/18.

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DTN 360 Poll

This week's poll asks how accurate you think Statistics Canada's April 27 planting intentions will be, given that the data is based on producer surveys conducted in March. You can share your opinion on this poll, located in the lower-right side of your DTN Canada Home Page.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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