Assumptions in Agriculture Canada’s recent supply and demand report have some worried.
Analyst Greg Kostal thinks Agriculture Canada’s canola production expectation could be too low because it doesn’t integrate a rising yield trend coming from new varieties.
And oat analyst Randy Strychar thinks the oat yield expectations are too high.
Neither analyst criticized the department, saying assumptions must be made when forming projections.
But the yield assumptions could have significant market implications. A canola yield expectation that is too low creates a lower than probable production expectation, which would make the canola supply seem tighter than it likely will be.
Read Also
One Beer Market Updates Day 3 – Lentils and beef
Day 3 of the One Beer Market Update at Ag in Motion 2025.
And a too high oat yield estimate could create a too high return expectation in farmers thinking of jumping into the crop.
Agriculture Canada pegged average prairie canola yield at 31 bushels per acre, which fits the long-term trend line. But recent advances in genetics might mean the yield trend line should slope higher, Kostal said. In the past two years, average yield topped 34.5 bu. per acre.
“That estimate would err on the side of conservatism,” he said.
“It’s always tough to strip out the externalities – fertilizer, weather, everything else – to isolate the genetics, but yields are increasing at an increasing rate. I still have to believe that the 2015 Canola Council of Canada vision of a tonne an acre, or about 44 bushels per acre, is still possible.”
As for oats, Strychar said he worries fringe producers will rush into oat production this spring because of rosy return expectations based on overly optimistic yields.
For instance, farmers in Manitoba might expect to produce 100 bu. per acre on average, which would allow them to reach the Agriculture Canada return result.
But Strychar said the Manitoba provincial average for oat production is about 86 bu. per acre. That leaves a big gap.
“I don’t think you can just expect top yields,” said Strychar about oats.
For canola growers, a lowball Canadian production forecast based on a too low yield estimate could cause the wrong market expectations.
An extra one bu. per acre of canola equals about 380,000 tonnes of production. Kostal said average trade forecasts assume yields of 33 or 34 bu. per acre. That would produce a crop close to a million tonnes more than the Agriculture Canada forecast of 11.6 million tonnes.
