WINNIPEG – The latest acreage report by Statistics Canada failed to surprise most investors in the canola market, however it still could leave futures looking overpriced, according to a trader.
“It certainly is a negative number,” said Ken Ball, of PI Financial in Winnipeg, referring to the agency’s estimate for canola.
Statistics Canada pegged acreage in 2018/19 at 22.7 million acres, up significantly from the March estimate of 21.4 million. Canadian farmers seeded 23 million acres in 2017.
Most participants expected a jump though so the number itself wasn’t much of a surprise. Still, it comes in the wake of a sharp drop down by U.S. soybeans which have lost well over US$1.50 since late May.
“It (canola) is certainly higher priced compared to the other U.S. markets,” he added. “Leaving it vulnerable to the downside.”
Still, others thought canola acreage would be much higher.
“We thought there were more canola acres out there,” said Neil Townsend of FarmLink Marketing Solutions in Winnipeg. The advisory group pegged acreage 23.4 million.
He added StatsCan’s durum forecast also came as a surprise. The agency forecast durum at 6.2 million acres. That compares to last year’s total of 5.2 million acres.
“We thought it would be much lower than that,” he said, adding their estimate was closer to 5.5 million.
One of the other crops to see its acreage cut in the report was flax. StatsCan predicted just 885,000 acres would be grown in the coming year, down from over a million acres last year.
“Flax used to be a third of the acreage in Manitoba,” said Bill Craddock, a trader who also farms and owns an aerial spraying operation near Winnipeg.
As for canola, one analyst feels the market could be due for a significant move as early as next week.
“There is something about the Canada Day time-frame,” said Mike Jubinville of ProFarmer Canada in Winnipeg.
“(After it’s over) we tend to either abruptly change direction or accelerate the trend we were previously on,” he said.
The following table is a recap of Statistics Canada’s acreage report as of
June 2018. Pre-report expectations are provided for comparison purposes. Figures are in million acres.