Satellite crop estimate too low: analysts

Satellite measures crop vegetation | Yield forecast of 34.5 bushels per acre canola “more than a little bit on the low side”

Statistics Canada’s first satellite based yield estimates of the year are way off the mark, according to grain analysts.

The Crop Condition Assessment Program (CCAP) is forecasting an average yield of 34.5 bushels per acre for canola, 43.8 for spring wheat, 39.5 for durum and 63.4 for barley.

All four numbers are lower than the estimates contained in the agency’s September survey of farmers, which many analysts felt was already conservative.

Statistics Canada is considering replacing the September principal field crops survey with production estimates generated from the CCAP satellite data as early as next year.

Chuck Penner, an analyst with LeftField Commodity Research, said the 2013 yield estimates generated by CCAP shows the folly of that plan.

“They’re too low, frankly. There’s very little question that they’re too low,” he said.

Penner said farmers were also fooled by the visual appearance of their crops.

The numbers that showed up on their yield monitors was a pleasant surprise to many growers.

“Remote sensing tells you what the vegetative growth is but not what the seed is,” he said.

Penner believes the technology is being fooled by new varieties that put more effort into producing seeds than leaves.

“You get stubby little canola plants with a bazillion pods on them,” said Penner.

He worries that the accuracy will be even worse with small acreage crops because Statistics Canada has little experience interpreting satellite data with them.

“I have five words — back to the drawing board.”

Penner’s average canola yield estimate is 40 bu. per acre, which is in line with what other analysts and provincial agriculture departments are forecasting.

Saskatchewan Agriculture believes the average yield in that province is 38 bu. per acre, while Alberta Agriculture is forecasting 43.

Those numbers would add another 1.1 million tonnes to Statistics Canada’s 15.96 million tonne production estimate.

Penner said Statistics Canada’s September estimates are notoriously conservative.

For instance, over the past 10 years the September canola estimate has been an average of 873,000 tonnes below the November estimate while wheat has been underestimated by an average of slightly more than one million tonnes.

“Farmers get frustrated with grain companies who talk about how big the crop is because they have a motive in trying to talk down prices. Farmers have the opposite motive,” he said.

“I think that has become a bigger issue in the past few years. You almost have to add a fudge factor to the StatsCan numbers for any crop.”

Derek Squair, president of Agri-Trend Marketing, said yields dropped the longer that harvest dragged on this year, but he agreed the CCAP numbers are not accurate.

“Those yields are a little bit on the low side, or more than a little bit on the low side,” he said.

Squair was forecasting a 42.5 bu. per acre average for canola early on in the harvest, but he has reduced it to 39.

“Some of the later canola was still flowering when the heat hit in early August,” he said.

Squair is forecasting a 47 bu. per acre average for spring wheat, 79 for barley and 36 for peas.

“Some of the quality is a little bit poorer in that later crop as well.”

Rain in key growing areas caused bleaching and fusarium damage in wheat and durum.

Squair said markets can sometimes become too caught up in figuring out the size of the crop rather than focusing enough on demand.

He said there are a number of bullish factors in the market, topped by China’s production problems.

“We’re seeing a lot of wheat and canola and soybeans being sold to China that is really bringing the rally around,” he said. “We’ve got a pretty good rally here since harvest because of those issues.”

Europe is buying more Canadian wheat than usual, and there is plenty of interest in North American wheat in Brazil because of a crop failure in Argentina.

“We’re seeing that really prop up wheat prices,” he said.

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