Delivery calls were added for CW Red Spring wheat, Canadian Prairie Spring Red, CW Red Winter, CW Soft White Spring and durum. The durum call is for straight only, not tough or damp. New calls are in boldface.By Ed White
Winnipeg bureau
markets
Farmers are heading into spring with no obviously profitable crops to grow.
The recent market rally appears to have run out of steam, leaving no hint about which crop is likely to be most valuable after harvest.
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Agriculture Canada’s March 14 outlook shows heavy carryouts blighting the future for most crops, and the few in short supply this winter being drowned by increased spring area.
“I’m a believer in ‘stick to your rotation,’ ” said Calgary analyst Errol Anderson about the choices farmers face.
Agriculture Canada’s outlook suggests this winter’s best-looking crop, flax, will be hammered by a one-third increase in acreage, less abandonment and normal yields. Production could more than double, leading to larger stocks and weaker prices.
This winter, flax reached $13 per bushel as buyers sought scarce supplies. Oats, which saw good prices this winter, are also expected to be plentiful next autumn given normal weather.
Agriculture Canada sees an eight percent increase in oats production.
Oat market analyst Randy Strychar said farmers should realize that normal harvest weather will produce burdensome stocks that will depress prices.
“If a producer has the idea of increasing his oats acres this year, he’d better be a pretty astute marketer,” he said.
If the carryout is close to 1.3 million tonnes, it will be a 25-year high.
Given forecasts for more flax acres and lower prices, one might suspect that farmers would rethink their plans. But Strychar said that is unlikely.
“My experience is farmers grow for what they got, not for what they’re likely to get,” he said. “They look backwards, not forwards.”
He thinks the recent rally was too short and technically driven to affect farmers’ plans.
“It was just a hiccup, and not even a very large one,” said Strychar.
The futures rally mainly occurred on paper. Cash prices hardly budged.
“The elevators don’t like jacking the prices up and down. It would have been different if it lasted a few weeks.”
Anderson is more optimistic. The recent surge may have faded, but “this money’s still on the sidelines and they’re going to hit it again.”
If the market goes up again, Agriculture Canada’s expected drop in canola acres may not occur, or be limited.
“The canola acres won’t be down very much,” he said.
Anderson thinks prospects are good for better canola prices, but the best hope may be for corn. Corn fell behind soybeans in the recent rally.
If a lot of U.S. corn acres shift to soybeans because of better soybean prices, and a significant weather problem develop in the U.S., “corn prices could double.”
Anderson said this type of swing occurred in 1995 and 1996, when the corn market went from being oversupplied to undersupplied in a year, with corn prices doubling.
