Larry Weber receives pictures of decimated canola crops from his market newsletter subscribers on a daily basis.
One of the latest from a farmer in east-central Saskatchewan shows a ball cap amidst a field of blooming canola. The cap sits as tall as the plants.
Photos like that and the evidence gathered during an extensive 2,500 kilometre crop tour of Saskatchewan, with stops in Lloydminster, Gull Lake, Estevan and Yorkton, has the market analyst forecasting one million fewer tonnes of canola than trade and government analysts are predicting.
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The publisher of the Weber Commodities Ltd. daily newsletter projects 9.2 million tonnes of production in 2009-10 and carryout of 380,554 tonnes, which would be the smallest ending stocks in a decade and well below the 10-year average of 1.44 million tonnes.
“It’s going to be a fight for seed,” Weber said.
Agriculture Canada’s market analysis group is using 10.3 million tonnes of production in its latest supply and disposition chart, scheduled to be released this week. That is up slightly from the April 30 version of the report due to newfound canola acres.
Group chief Fred Oleson said the average yield is 15 percent below the 2008-09 crop. The agency is reluctant to drop it lower until it has a better handle on crop conditions. Carryout is forecast at 700,000 tonnes.
“It’s getting to be questionable where everybody is going to get their supply from,” said Oleson.
Louis Dreyfus Canada, a company that plans to open its 850,000 tonne canola crushing facility in Yorkton, Sask., this fall, is on the same page as Agriculture Canada.
“With today’s weather, we’d see a crop between 10 and 10.2 (million tonnes),” said company president Brant Randles.
He is forecasting 1.1 million tonnes of carryout and is not concerned about available supply for the Yorkton plant.
Weber said most of the trade is still using 10.2 to 10.5 million tonnes in their supply and disposition reports. He believes they are being overly optimistic by a million tonnes or perhaps more given the increasing likelihood of frost damage to a crop two to three weeks behind schedule.
Precipitation maps show it is still desperately dry in east-central Alberta and portions of western Saskatchewan, which are big canola producing areas. Meanwhile, farmers in Manitoba continue to receive unwanted moisture.
Weber’s advice to growers is to sell only what they need for cash unless they see a two-week wet pattern develop in the western portion of the prairies.
“(Farmers) are going to see a lot more than $10 (per bushel) for new crop seed,” he predicted.
Buyers need to take their blinders off and start bracing for a vastly reduced supply, said Weber. If the crop comes in at 9.2 million tonnes, it will be 27 percent smaller than last year’s harvest, leading to a rationing of seed exports and domestic use.
Weber has penciled in 4.7 million tonnes of domestic crush, up slightly from the 4.5 million tonnes he anticipates in 2008-09. That’s a 200,000 tonne increase despite the addition of 1.6 million tonnes of capacity with the Louis Dreyfus plant and Cargill’s new facility in Clavet, Sask.
“There’s not going to be enough seed for everybody,” he said.
His forecast calls for a 21 percent decline in canola exports, which has him questioning some of today’s sales.
Last week, one vessel of new crop canola was sold to Mexico and two to China. Exporters need to rethink sales to low-value markets including China given today’s dismal crop outlook, said Weber.
