and Reuters News Service
There was little good news for Canadian farmers in the initial guesses about what their counterparts to the south will be planting this spring.
The first United States Department of Agriculture forecast of the season showed American farmers intend to seed record acres to soybeans and plant the biggest corn crop since 1985.
The survey also revealed they might plant the smallest wheat crop in 10 years.
However, the durum crop could turn out to be the largest since 1982.
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Allan Johnston, a grain broker at Welwyn, Sask., said the USDA report painted a bleaker picture for farmers already wondering how they’ll make money this summer.
“It just shows there’s no strength in any of these markets right now,” said Johnston. “If we’re going to have any strength, it’s going to have to be weather scares from here on.”
John Duvenaud, of Wild Oats Publishing, said he sees potential in the USDA forecasts for a smaller spring wheat crop, especially when Canadian farmers are expected to similarly reduce production.
“We’re at the bottom of the barrel right now, price-wise, for spring wheat,” said Duvenaud.
But world stocks of wheat are fairly tight, he said. If there are problems during the growing season, the wheat market may see a reversal in its fortunes.
“It’s like a big ocean liner. You’re not going to turn it on a dime,” said Duvenaud. “A large number of producers are all getting out of it at the same time, and that’s usually a sign to do a contrary move and get into it.”
Charlie Pearson, analyst with Growers’ Marketing Services, questioned whether U.S. wheat acres will decline as much as forecast.
“There’s some thinking that they’ve maybe gone a little bit overboard in terms of reducing some of the acres,” he said, explaining gains in soybean and corn acres are much less than losses in wheat acres.
Pearson said farmers should pay more attention to yield forecasts after the crop is in the ground.
A bumper corn crop would pressure feed grain prices, while dry conditions could lead to price increases.
“Even with the acreage (forecasts) … we still have potential for higher prices,” said Pearson.
The USDA report shows farmers are thinking about doubling their flax acres. The U.S. is a relatively small producer of the crop.
But Pearson said extra flax production may trim demand from U.S. buyers, who usually import about 150,000 tonnes of Canadian flax.
“It’s an indication that we’re not going to have $12 (per bushel) flax next year,” said Duvenaud. He expects average flax prices since inventories are tight.
The USDA also released a stocks report that showed there is more 1997 corn left over than had been anticipated, weighing on feed grain prices.
Pearson said U.S. livestock producers had the same warm weather that caused Canadian farmers to buy less feed grain.
And Johnston said farmers who held on to feed grain when markets started dropping last November are now left with little hope.
“We’re just telling guys to sell, sell, sell here, because I feel this market is going down,” said Johnston.
