Farmers plan to boost their acres of money-losing spring wheat by a lot more than they plan to increase acres of money-making canola, according to Statistics Canada.
However, analysts say the numbers aren’t as wacky as they may sound.
Farmers are planting the maximum they can of canola, while the spring wheat increase comes at the expense of worse-returning cereal crops such as durum and barley.
“There’s nothing too surprising,” said Chuck Penner of Informa Economics after the April 26 report was released.
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Jonathon Driedger of FarmLink Marketing Solutions concurred.
“It’s not a game changer. There’s nothing too shocking,” he said.
Canola has been the consistent favourite of farmers and market advisers this past winter as a likely money maker, but Statistics Canada is predicting acres will increase only 4.4 percent to 16.9 million acres.
That will still be a record-sized crop and capable of producing the biggest yield ever.
Analysts say acreage is not growing more because farmers are already pushing their rotations aggressively and can’t safely plant canola without incurring significant disease threats.
With spring wheat, analysts say the 7.1 percent increase in planned acreage to 18.1 million acres is a product of farmers needing to seed a cereal crop and having few other options.
Durum acreage will slump 35 percent from last year’s acreage as farmers switch from a crop that has consistently bad outlook reports from a number of sources.
As well, oat prices have fallen since mid-winter and farmers appear to have moved back into spring wheat as well as into lentils.
The durum outlook has been made worse by high subsidies offered for U.S. durum production.
“It’s a good thing if acres are as down as they say they will be,” Penner said. “In light of what’s happening in the United States with loan rates on durum, this is probably a good thing.”
Advisers had been worried for much of the winter about oat acres surging because of price strength when wheat was slumping. Agriculture Canada predicted a huge acreage increase if oat prices stayed high into the seeding period.
However, prices fell in late winter and removed that incentive.
Randy Strychar of OatInsight said the now-planned six percent increase in Western Canada to 3.6 million acres from last year’s 3.4 million is what traders have been expecting and should not alarm the market.
With normal conditions, Canada should produce 16 percent more oats than last year but less than the five year average.
The continued high canola acreage will likely produce a large crop, but analysts still favour it as a good earner for 2010.
