The latest crop numbers from the United States Department of Agriculture have confirmed it.
As far as prices go, 2001-02 is shaping up to be a good year.
“It’s probably the most positive attitude we’ve had since 1996 going into a crop year,” said Paul Cassidy, market analyst with Mitcon Inc. of Calgary. “It’s about time.”
That upbeat interpretation of the USDA forecast is shared by Charlie Pearson, who tracks the markets for Alberta Agriculture.
“On canola and feed grains, we have prices pretty well supported at current levels, and there’s maybe a source of optimism for some higher prices as well,” he said last week.
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Pearson acknowledged the prospect of improved prices may be of little solace to the thousands of prairie farmers whose 2001 crops were burned out by drought, pounded to shreds by hail or ravaged by disease or insects.
But still, he said, every additional dollar will be crucial in what will be a difficult year for many producers.
In its Aug. 10 crop report, the USDA reduced its monthly estimate of the U.S. corn crop by about six million tonnes to 253.4 million tonnes.
It scaled back the world corn estimate by 16 million tonnes to 591 million and slashed ending stocks to 124 million tonnes, down from the July estimate of 142 million.
Analysts said the corn numbers point to potentially tight feed grain supplies in North America this year, which should support prices for all feed grain, including Western Canadian barley.
“I hate to use the term bullish for anything right now, but it is creating a more optimistic situation,” said Pearson.
The USDA bumped up its corn price forecast by 15 cents US a bushel.
Some U.S. analysts say corn prices could jump to their highest levels since 1997-98, noting that crop conditions have deteriorated significantly since the Aug. 1 survey that produced the USDA numbers.
One U.S. market service calculated the world stocks-to-use ratio for corn would fall to around 20.2 percent, the lowest level in 20 years.
Cassidy said he suspects next month’s USDA report will have even lower corn numbers: “It won’t be a runaway market, but that will continue to put some underlying support to this market.”
As for oilseeds, the USDA forecast was essentially the same as last month, with world production staying at 177 million tonnes and ending stocks increasing marginally to 28.6 million tonnes.
Nevertheless, the department did raise its price forecast for soybeans by 35 cents US a bu. from last month, citing tighter U.S. and global oilseed supplies.
Analysts said the soybean crop, like corn, has suffered since the survey and next month’s report will reflect even smaller output.
Agriculture Canada oilseed market analyst Chris Beckman said the numbers confirm there is underlying strength in the oilseed market for both seed and vegetable oil, which bodes well for canola growers.
“It looks like the worst of the prices are behind us.”
Beckman said the USDA numbers won’t result in any change in the canola price projection of $320 to $350 a tonne (basis in-store Vancouver) previously issued by Ag Canada.
“We had been a little more bullish and right now I think these new numbers confirm our forecast,” he said.
Pearson said the current price situation could prompt South American growers to increase their acreage in the upcoming planting season by five to 15 percent, which could flatten prices later in the year.
