In the last couple of weeks we’ve seen a great rally in oilseeds.
The market had to make oilseeds more attractive to get the needed acres in North America to make up for the drought-reduced crop in South America.
The rally in canola has some analysts talking about as much as 21 million acres of the crop.
As the market woke up to that idea, oats users were knocked off their complacency and became worried about acreage loss to canola.
From the close March 9 to March 19 the May oats contract rallied 46.75 cents and December rallied 29 cents.
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But that is not enough to generate any oats acreage gain over what was expected last year and no stocks building. Oats missed out on the February rally and is still one of the least profitable options that prairie farmers can grow this year.
New crop oats values will have to rise to stop a production drop.
The current upbeat outlook for oilseeds in 2012-13 is not likely to be thrown off by the United States Department of Agriculture seeding intentions report due March 30.
Recent outlooks by Allendale Inc. and Informa Economics indicate no big change from USDA’s early forecast of 94 million acres of corn and 75 million acres of soybeans.
Allendale’s survey released last week said American growers intend to seed slightly more than 95 million acres to corn and about 74.5 million acres of soybeans.
Informa Economics earlier this month forecast 95.5 million acres of corn and 75.13 million acres of soybeans. The greater risk to prices is the warm weather blanketing the U.S. giving traders the impression that crops will be seeded early, which is usually good for yields.
As for canola, it appears to have independent strength thanks to red hot demand.
Last week, Agriculture Canada updated its supply and demand estimate and lowered its carryout number for the current crop year to a very tight 700,000 tonnes.
Ag Canada forecasts 2012 planted area at 20.39 million acres, up from 18.86 million last year.
Ag Canada pegs 2012-13 canola production at 15.4 million tonnes, up from 14.165 million tonnes in the current crop year. That is based on the assumption of yields almost identical to last year at 34.1 bushels an acre.
It sees stocks at the end of 2012-13 climbing to only 800,000 tonnes, still a very tight situation.
