Canadian canola plantings will increase by about 3.5 percent this spring to their highest level in three years, according to estimates from Statistics Canada.
But the increase will be lower than what many industry analysts had expected, given near-record oilseed prices, low North American oilseed inventories and steady global demand.
According to Statistics Canada’s annual planting intentions report released last week, Canadian producers will plant an estimated 21.5 million acres of canola this spring, up nearly 750,000 acres from last year.
If the estimates play out, canola plantings will be at their highest since 2018, when growers seeded 22.8 million acres.
The StatsCan report also projected Canada’s spring wheat plantings at 16.3 million acres, down nine percent from 2020, and durum plantings at 5.7 million acres, up marginally from last year’s 5.69 million acres.
Canadian barley acreage, meanwhile, was projected to increase by a whopping 14 percent to 8.6 million acres.
Kevin McNew, chief economist with Farmers Business Network (FBN), said Statistics Canada’s estimates were roughly in line with FBN’s own Canadian planting estimates, which were based on a poll of 400 farmers in Manitoba, Saskatchewan and Alberta.
“What our poll and our data showed us was more or less consistent with what seemed to materialize in the Stats Canada report,” said McNew.
“Farmers are not as eager to plant canola as what the trade had expected.
“The trade was looking for a pretty big jump in canola acres. Our farmers and Stats Canada’s numbers showed that (growers) are going to plant more canola, but maybe not to the level and degree to which many traders had thought.”
McNew said Canadian and American farmers are looking at attractive net returns on a number of crops this year.
Canadian canola and American soybeans are facing stiff competition for acres from other crops that offer lower production costs and historically high returns.
High global demand for feedgrains, including corn and barley, has prompted many growers to opt for modest increases in canola and soybean plantings, even though North American oilseed supplies have been drawn down to extremely low levels.
By some estimates, Canada’s carry-out canola stocks could be as low as 600,000 tonnes.
“There is no shortage of crops that are offering hefty premiums this year,” said McNew, when asked about projected canola plantings in Canada.
“It’s almost an embarrassment of riches this growing season, where farmers really didn’t have to dial in on just one crop. They have a multitude of crops to choose from.”
Mike Jubinville, market analyst with Glacier MarketsFarm, agreed.
With strong prices and attractive marketing opportunities for almost all crops this year, growers have many options, he said.
“An increase in canola acres was certainly expected universally by the trade… given current market conditions,” said Jubinville.
“If you’re able to get $15-$16 a bushel fall delivery new crop and lock that in today, that’s as good as I’ve ever seen in canola marketing history.
“But the canola estimate in itself — 21.5 million acres — probably came in at the very bottom of what the trade was expecting.”
Jubinville suggested that actual canola plantings could exceed StatsCan’s March estimates, depending on soil moisture conditions across the West.
In nine of the past 10 years, StatsCan has adjusted its canola acreage number upward between its March and June reports.
But there is a practical limit to how much canola can be seeded, based on needed crop rotations, available soil moisture and agronomic concerns, Jubinville added.
Even if actual canola plantings exceed StatsCan’s estimates, Jubinville believes the upper limit for 2021 canola production will be in the range of 22 or 22.5 million acres.
Barring any unexpected market disruptions, the supply and demand fundamentals for canola should continue to support strong prices for the foreseeable future, he added.
“I think the strength of the demand for oilseeds this year and next is going to be such that even if we do put in 22 or 22.5 million acres this spring, it’s not going to be enough.
“We are going to be in the same boat next year as we are right now, where we are emptying the cupboard.”
Jubinville said “a very solid element of demand support” under North American oilseed markets will “limit any sizable downside risk in pricing.”
Nonetheless, competition for acres from other crops is intense this year.
Strong feed markets are a major factor driving many North American planting decisions.
Prices for old crop feed barley got as high as $7 a bu. in southern Alberta recently, a level that Jubinville hasn’t seen in 32 years as a market analyst.
Chinese demand for corn and alternative feedgrains is driving North American feedgrain prices to levels that are difficult to ignore.
That, combined with concerns over limited soil moisture, may prompt growers in some parts of the West to move some canola acres into cereal crops, particularly barley.
“Feed barley is kind of winning that war in Canada this spring and in the (United States), we saw a similar thing play out where producers didn’t grow as many beans as what the trade had expected,” McNew said.
Instead, they opted for more drought-tolerant feed crops.
Markets for Canadian barley and other feedgrains have been exceptionally strong.
“We have an export (barley) program as big as anything we’ve seen in the past 20 years, so this has put an additional draw onto alternative feed sources, and wheat figures into that prominently,” Jubinville said.
Right now, the price spread between top quality milling wheat and feed wheat is as tight as it’s ever been, he added.
Interest in canola and barley acres appears to have come at the expense of spring wheat.
According to StatsCan, spring wheat plantings will be about 16.3 million acres this year, nearly 1.6 million acres lower than a year ago.
At that level, the industry can expect tight Canadian stocks and good price support.
“Acres are down here in Canada and they’re down about 4.5 percent in the U.S. for spring wheat acres as well going into planting… so that could be interesting,” Jubinville said.
He called 2021 one of the most unique marketing opportunities he’s ever seen.
“There’s never been a time in canola marketing history where we’ve been able to lock in fall-delivered $16 canola before the crop’s even in the ground,” he said.
This has the potential to be “one of those career years” for Canadian farmers, he said.
Statistics Canada’s estimates were based on a survey of about 11,500 farmers across the country, conducted from March 1-29.