It didn’t shock anyone, but the Statistics Canada crop production
report released Aug. 23 has raised enough eyebrows to keep most crop
prices and outlooks high going into the new crop year.
“I didn’t find anything bearish anywhere in it,” said market analyst
Mike Jubinville of Pro Farmer Canada in Winnipeg.
“The downside potential in the near term is limited and the upside
potential is still there. I can’t remember seeing such a positive
report before.”
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Statistics Canada’s July 31 crop production estimates contained good
news for sellers of almost all prairie crops.
The report verified trade expectations that production would be
signficantly down. For some crops it found production could be even
lower than many had expected, which will shake up people who haven’t
been following trends.
“It certainly takes the dire situation in Western Canada to a wider
audience,” said Jubinville.
Production of wheat normally destined for sale should be severely cut
by poor yields in drough-hit fields, and by farmers deciding to keep
crops as animal feed, the report stated.
Stats Can expects 4.2 million acres of the Prairies’ 25.4 million
seeded acres of spring wheat to be diverted to feed.
The same phenomenon is expected in barley. Stats Can expects only 8.9
million acres of barley to be harvested for grain, with 3.8 million
already cut for silage, kept for grazing or simply abandoned.
The drought has hammered the prairie oats crop so badly that the
acreage, the largest since 1976, will still produce only a 2.7 million
tonne crop, well below the 10-year average of 3.4 million tonnes.
Errol Anderson of Pro Market Wire report said barley growers shouldn’t
get excited about the low production, because supply is only half of
the equation.
“This report is bullish on supplies, but bearish on demand,” he said.
“The barley demand in the feed market is going to die.”
Feedlots are half full and many will not aggressively pursue calves
that have to be fed with extremely expensive barley. Futures may be
signally that barley prices will be high in the fall and winter, but
cash bids aren’t showing the same willingness to rise.
“The feeders are digging in their heels,” said Anderson.”This fall it’s
going to be a Mexican standoff.”
Anderson expects to see producers hold their barley, waiting for cash
bids to rise. But he also expects feeders will avoid barley if they can.
Because of this, growers may see apparently good prices eaten up by a
widening basis.
