When Statistics Canada did its spring seeding survey at the end of March, canola didn’t look promising and wheat looked like a great bet.
Wheat still looks good, but canola now looks better and oats has begun to make it a three-way race for farmers’ acres.
“There are definitely going to be a lot of last minute decisions,” said broker Ken Ball of Union Securities in Winnipeg.
That means Statistics Canada’s predictions of a plunge in canola acreage, a hefty increase in wheat acres and a big area of summerfallow are unlikely to hold in the real world.
Read Also
One Beer Market Updates Day 3 – Lentils and beef
Day 3 of the One Beer Market Update at Ag in Motion 2025.
“At the end, I think all of the numbers will be a little more moderate,” said Ball.
Soybean futures have rallied, dragging up canola in the process. Oat prices have also rallied, even though StatsCan’s acreage estimate was not generally considered bullish.
Farmers told StatsCan that they planned to cut canola acreage by about 14 percent, but the price rally has probably cut that by two-thirds, said Errol Anderson of Pro Market Communications.
“StatsCan was probably right when they did the survey,” said Anderson.
“But canola’s starting to look good again.”
Ball said new-crop canola prices are beginning to entice growers, but it’s the upside potential that’s making them give canola another chance.
“Not only have canola prices firmed up, growers are realizing there might be interesting times ahead,” said Ball.
Anderson said the upside potential for 2006-07 prices is making him encourage farmers to leave their new crop unpriced.
“I wouldn’t price anything right now,” said Anderson. “I’d just wait.”
Influential voices are beginning to tout crops as the next place to make money in the worldwide commodities rally, which has so far missed most of agriculture.
Commodities guru Jim Rogers has been saying that agricultural commodities are the best bet for price increases, because many are still far below their all-time highs.
Anderson thinks speculative money may make crop prices both higher and more volatile this coming year. With agricultural commodities apparently the cheapest commodities in the world, there is lots of potential for them to get batted around and upward.
“That’s what we’re hearing from the commodity funds. As outsiders, they just don’t understand (why crop prices are so cheap),” said Anderson.
Statistics Canada’s prediction of an 11 percent increase in spring wheat acres may hold because of present strong prices, analysts say.
“Wheat acres are likely to hold fast,” said Anderson.
But wheat will face competition from oats, even though oats acreage is expected to increase by 19 percent.
Some are skeptical of the reports that farmers plan a 1.6 million acre increase in summerfallow.
“That may be just acres that farmers didn’t know what to do with at the end of March,” said Ball.
Flax acres are also estimated to increase, making it harder for its price to rally.
Durum, which has suffered low prices and a poor outlook, is expected to drop significantly in area.
