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Like many farmers in Western Canada, Ernie Sirski already is thinking about what to plant this spring.
He’s a big canola fan, but he’s more bullish about the prospects for wheat.
Predictions of a record soybean crop in the United States don’t bode well for canola oilseed prices. A sharp increase in palm oil production in Indonesia and Malaysia also weighs on the market.
“That’s going to keep the lid on canola this year,” said Sirski, president of the Manitoba Canola Growers Association.
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“There’s no doubt that some producers are going to start looking at this and start cutting back acres.”
His prediction jibes with the latest outlook from Agriculture Canada.
The department predicts that Canadian farmers will reduce canola plantings and return more acres to wheat in response to a depressed oilseed price outlook.
“We’re looking at a switch out of oilseeds and into wheat,” said Fred Oleson, chief of market analysis at Agriculture Canada’s Winnipeg office after the release of the 2000-01 preliminary Canadian market outlook.
Oilseeds dropping
Agriculture Canada predicts Canadian farmers will plant more acres to wheat, including durum, as well as to barley.
But it said harvested areas of canola will decline by about six percent to 13 million acres and flaxseed areas would also drop as oilseed prices remained depressed.
“The big downside will be the oilseeds,” Oleson said.
“Canola prices are expected to remain low.”
World agricultural commodity prices are forecast to remain low this year in light of large world wheat supplies, with 2000 production expected to jump to 600 million tonnes compared with 584 million tonnes estimated for 1999-2000.
Supply weakens price
“World oilseed complex prices are expected to decline due to burdensome supplies, which are overpowering demand,” the report said, adding most of the weakening in prices will come as a result of increased supplies of soybeans and lower U.S. soybean prices.
Canadian canola and flaxseed prices are expected to decrease slightly from 1999-2000, the report said.
Agriculture Canada also said Canadian grain and oilseed yields will return to average. Good growing conditions resulted in record yields for many crops in 1999.
“In 1999-2000 there were almost bumper yields,” Oleson said, adding more normal yields are anticipated this year.
Statistics Canada put the Canadian all-wheat crop at 26.850 million tonnes in 1999, compared to 24.076 million tonnes in 1998.
“We’re expected to see quite a jump in durum area,” Oleson said, adding prices remain high and the U.S. has produced a poor crop.
“Possibly last year producers overreacted to expected price outlooks.”
The report said durum area will rise by 25 percent because of higher prices.
“Production is forecast to increase by 15 percent to 4.9 million tonnes, but this will be offset by lower carry-in stocks,” the report said.
Durum in 1999 fell sharply to 4.259 million tonnes from 1998’s 6.042 million tonnes – a drop prompted by previous projections for low world durum prices.
