Farmers are massively increasing their acres of many crops this spring compared to last year, but that doesn’t necessarily mean much to the market and may not hurt prices.
“Most of the numbers are roughly in line with the range of estimates,” said market analyst Jon Driedger of FarmLink Marketing Solutions soon after Statistics Canada released its spring seeding intentions report April 26.
“I think in the end the trade is going to look at this and say at the end of the day the numbers weren’t out of line with what people were thinking.”
The big acreage increases this year have much to do with lower acreage last year due to appalling spring conditions that prevented millions of acres being seeded, analysts said.
In early trading Tuesday, canola futures were lower, but so were soybeans and corn. Oats, which StatsCan pegged at increasing by 39 percent in acreage this spring compared to 2010, initially rose in price for most futures contracts, bucking the trend in other crop futuress. Later in the morning oats were down.
StatsCan found that Canadian farmers are planning to plant a record large acreage of canola, at 19.23 million acres, and a large area of spring wheat, at almost 18 million acres. That compares to last year’s 16.48 million acres of canola and 16.98 million acres of spring wheat.
Barley area should increase to 7.8 million acres from last year’s 6.9 million, StatsCan said.
Farmers said they intended to increase oats area by 39.3 percent to 4.06 million, durum acreage by 60.3 percent to 5.05 million acres and flax by 30.8 percent to 1.21 million acres.
But most of those major increases diminish, disappear or reverse when compared to 2009 acreage, with oats only rising 8.7 percent, flax falling 29.2 percent and canola increasing 18.7 percent over the period.
Driedger said StatsCan’s forecast decline of 56.2 percent for summerfallow hangs a big question mark over likely final acreage, because farmers might not be able to seed nearly as many acres as they hope to right now.
“They have summerfallow way below what the previous record low is,” said Driedger.
“In the context of this kind of spring we’re having, we just know that somewhere along the way some acres won’t get into the ground.”
Acreage of peas, beans, sunflowers and some other minor acreage crops are forecast to decline, but Driedger said farmers can easily move those numbers higher by switching a few acres if offers from buyers increase.
The drop in summerfallow and the huge acreage for canola, as well as other acreage increases, are signs that farmers are hopeful about the 2011-12 year, regardless of their problems last year.
“It shows the tremendous optimism that farmers have right now, especially with the good grain prices that we see,” said Phillips.
Especially good is the fact that the spread between fall crop prices and present input costs hasn’t been squeezed nearly as much as during the last spike in crop prices.
“Unlike in 2008, when some input prices spiked unreasonably, this time we’re not seeing the same spike. We’re seeing more measured increases out there.
“There’s a lot of optimism out there.”
