WINNIPEG — After predictions of a record canola acreage and a drop in pulse crop acres, traders and analysts are doubtful of Statistics Canada’s predictions for smaller canola acreage, much larger wheat acres and only minor reductions in pulse acres.
“It’s unusual for everybody to just be this out of whack on this report. I think the chatter’s been circling for quite a while that canola acres were going to be up a little bit and probably wheat acres up a little bit and then other things down a little bit. But it didn’t come out that way at all,” said Ken Ball of PI Financial in Winnipeg.
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In Statistics Canada’s principal field crop areas report, canola acreage for 2018-19 as of March 31 is predicted to be at 21.4 million acres, compared to pre-report trade estimates that all came in above last year’s record acreage of 23.0 million acres.
Pea acres are predicted to be at 3.9 million acres, compared to trade estimates of 3.2 to 3.7 million, and lentil acres are estimated to be at 4. 1 million acres, compared to pre-report estimates of three to 3.9 million acres. Canadian farmers seeded 4.1 million acres of peas and 4.4 million acres of lentils.
While canola acreage is set to fall, wheat acreage will grow, according to the Statistics Canada estimates. Wheat acreage is predicted to be at 25.3 million acres, compared to pre-report estimates of 20.5 to 24.2 million acres and the year ago level of 22.6 million acres. The growth is estimated to come from spring wheat acres, which are predicted to jump by 15.4 per cent to 18.2 million acres.
So are any of you #westcdnag farmers actually going to cut back on canola acres? Or are you just playing with StatsCan. C’mon. Fess up.
— Ed White (@EdWhiteMarkets) April 27, 2018
Most traders and analysts were shocked by the numbers. When contacted before the report, almost all had pegged canola to hit a record acreage. There was a prediction wheat acres could increase, due to people abandoning pulse crop acres over the trade uncertainty with India, but not as much as Statistics Canada has predicted.
“I’m a little bit skeptical that we’re going to see an actual decline in canola acres. I think that the feedback we get from our clients, from other people in the country, anecdote reports from seed sales reps and so forth, is that I think that we’re all but certain to see an increase in canola acres,” said Jonathon Driedger, a senior market analyst with FarmLink Marketing.
The market response to the report was muted, with many traders being cautious due to not fully believing the report. According to Mike Jubinville of ProFarmer Canada in Winnipeg, usually when canola acreage decreases, it is supportive to the market and contracts will jump by $10.
“The combination of not believing this number and the global marketplace under pressure means canola’s really having trouble responding bullishly to this,” he said.
If the lower canola acreage does come to fruition, it will be good news for the market. Less canola acres will mean less carryover for canola stocks and provide a cushion for the marketplace.
However, Ball said the spring wheat acreage increase could have been predicted based on the U.S. Department of Agriculture acreage predictions. In the USDA prospective plantings report released in March, U.S. spring wheat acres were pegged to be at 12.7 million acres, compared to 11.0 million acres last year.
“Obviously growers are leaning back, possibly due to weather considerations on a good part of the wheat areas. At the time when these decisions were being made, it was looking pretty dry in most of the spring wheat areas and they may have been leaning towards going back to more spring wheat acres,” Ball said.
Overall traders and analysts are saying they expect the acreage numbers to be revised closer to their predictions when Statistics Canada releases new information in June.
