Canola estimate feels the heat

A wide gap is emerging between federal and provincial government canola yield estimates.

Statistics Canada’s latest satellite-based forecast issued on Sept. 14 calls for an average of 39.6 bushels per acre in Saskatchewan.

That is a far cry from Saskatchewan Agriculture’s first estimate of the year forecasting a provincial yield of 35 bu. per acre.

Shannon Friesen, crops extension specialist with Saskatchewan Agriculture and the person who puts together the province’s weekly crop report, said yields have been disappointing.

“We have heard from many of our reporters that canola yields aren’t what they first expected them to be and that’s mainly due to the heat wave that we did have in August and the lack of moisture as well,” she said.

“The combination of it just being too hot and too dry for too long seems to have taken more of an impact on the crop than first thought.”

Yields are particularly dismal in southwestern Saskatchewan, where crop reporters are forecasting a 29 bu. per acre average.

Temperatures were in the 30 to 35 C range during flowering and early podding in that area of the province.

The hope was that yields would improve as harvest moves further north, but an early-September frost may have capped the rebound potential, said Friesen.

Neil Townsend, chief market analyst with FarmLink Marketing Solutions, is even higher than Statistics Canada, at 41.5 bu. per acre.

“There is nothing we’ve seen that would support 35,” he said.

“We might end up on the high side but I don’t think we’re high by 6 1/2 bushels.”

Saskatchewan Agriculture’s number would result in 17.8 million tonnes of Canadian production, which would be 1.8 million tonnes below FarmLink’s estimate.

“The math just wouldn’t work. Canola would be $14 per bu.,” said Townsend.

MarketsFarm analyst Bruce Burnett has been steadily dropping his canola yield estimate.

During the Ag in Motion show in late July he was predicting a prairie-wide canola yield of 42.6 bu. per acre. He’s now down to 39 bu. per acre in Saskatchewan, which is in line with Statistics Canada.

He agreed with Townsend that if Saskatchewan Agriculture is correct, total production will be below 18 million tonnes. That is a far cry from the 19.4 million tonne crop Statistics Canada is forecasting.

A similar discrepancy between federal and provincial government estimates is unfolding in Alberta.

Statistics Canada’s latest forecast is for a provincial canola average of 45.4 bu. per acre. That is well above Alberta Agriculture’s forecast of 41.4 bu. per acre.

Townsend is at 42.7, while Burnett is at 42. Townsend said if Alberta Agriculture is correct, that will drop the overall production number even lower.

Manitoba does not generate yield estimates. Statistics Canada is at 41.7 bu. per acre for that province.

Burnett said if the provincial government yield estimates prove accurate, that would lead to some interesting market dynamics given the small carryout from the 2019-20 crop.

He noted that there is strong early-season export demand for the crop and crush margins are good, so domestic demand should be there as well.

“We’re going to see some very, very tight stocks, so that’s going to create a price response here,” said Burnett.

That is already happening to some degree with canola values on the rise last week.

Burnett said there is going to be plenty of debate about yields until Statistics Canada releases its survey-based final crop production estimates Dec. 3.

“The market is going to be flying pretty blind here in terms of what the production estimates are,” he said.

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