What began as a crop year full of promise and high expectations has wilted away into just another mundane effort, according to Statistics Canada.
“After an optimistic spring that allowed timely seeding with average rainfall in most areas, continuous hot and dry weather in July stressed crops and accelerated development,” said the agency in its first production estimate of 2006.
In a year in which farmers in northeastern Saskatchewan couldn’t seed a crop due to excessive moisture and producers in Manitoba finally received decent growing conditions, overall crop yields are expected to come in around normal.
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Heading into the release of the Aug. 25 report, crop traders knew that farmers would be forced to pare back their earlier bumper crop aspirations. But in the case of durum, barley and canola, they were caught off guard by how drastically yields had been sliced.
Durum production will be down 42 percent from 2005 levels, according to Statistics Canada’s late July-early August survey of 17,600 farmers.
The agency is predicting 3.4 million tonnes of the crop, which is about 300,000 tonnes less than what the grain industry was expecting, according to a Reuters survey of traders conducted before the report was released.
“That takes stocks down to a more reasonable level,” said Canadian Wheat Board market analyst Jason Newton.
“It is favourable in terms of durum prices. It is quite a drop in production from last year.”
Even with the dramatic decline in production he wouldn’t describe durum stocks as tight but said it is certainly a positive development compared to the past two years.
The report is also supportive of a barley price rally, said Newton, especially when combined with poor production prospects in Australia and the United States.
Statistics Canada expects 10.3 million tonnes of barley, down 18 percent from last year and 600,000 tonnes below what the trade was expecting.
“As we move forward into the latter parts of the year, it should be favourable. The market will need to buy more acres for next year,” said Newton.
Canola farmers expect to harvest eight million tonnes of the oilseed, which would be 17 percent smaller than last year’s crop and 200,000 tonnes below trade expectations.
“This estimate is likely reasonable but we still don’t have a very good sense of what’s going to come in for the later-seeded stuff,” said JoAnne Buth, vice-president of crop production at the Canola Council of Canada.
Some farmers she has spoken with are disappointed because the heat caused blasting in their crops, resulting in reduced yields.
Others she talked to in Alberta are delighted with the 50 bu. yields their canola crops have delivered.
Statistics Canada is forecasting an average countrywide yield of just over 27 bu. per acre in 2006, which is down slightly from the long-term average of 28 bu.
Buth thinks the agency may have underestimated Alberta’s production, which could bring yields back up above the long-term average in future production estimates.
It wouldn’t be the first time the agency has missed the mark. Last year’s initial canola estimate was 8.3 million tonnes, but by December, Statistics Canada had revised the figure up to 9.7 million tonnes.
Buth said with the large carryout from last year’s crop, there will still be plenty of supply. She expects canola prices will slump a bit as this year’s crop hits the market.
Spring wheat is one crop where production is forecast to come in above last year’s level. Prairie farmers expect to harvest 18.6 million tonnes of the crop, up more than one percent from last year’s output and one million tonnes above the 10-year average.
Newton said the spring wheat crop is coming off better than anticipated considering the hot and dry weather.
“We’ve seen that in the States too. In North Dakota, their yields have been much better than originally expected as well.”
Winter wheat is another pleasant surprise. Farmers expect to harvest 3.5 million tonnes, up 68 percent from last year, due in a large part to Ontario’s record crop of 2.5 million tonnes.
