This morning StatsCan came out this morning with some eye-popping increases in farmers’ acreage intentions – and the market’s ignoring it.
Or rather, the market’s saying: “Yep, that’s what we thought.”
Although some of the acreage numbers are on the high side of trade guesses, most traders and analysts don’t expect farmers to be able to actually seed all the acres they want to seed, so the acreage of almost everything should decline a bit unless the weather is PERFECT. Which it never has been before.
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Another reason the market isn’t too excited about these numbers is that they only look big for most crops when compared to last year. StatsCan helpfully included 2009 acreage numbers as well as 2010’s, and the big increases this year are clearly the result of normal intentions following a year in which farmers couldn’t seed all the acres they wanted to seed. Compared to 2009, we’re pretty evenly keeled. Canola’s the biggest gainer from 2009 to now, with an almost 19 percent increase in intended acres this year compared to ’09, but we all knew canola’s been eating up the acres and farmers will grow all they can this summer. So that’s not news.
This morning it’s hard to find a direct impact of the report on the futures markets, with Canadian-based crops like spring wheat and oats roughly following the rest of the crops and the rest of the commodity market. Oats, which StatsCan is forecasting to increase by 39 percent in acreage this year, has its price rising this morning. That would be odd, except that even with an extra 40 percent of oats harvested this fall, the oats carryout will still be beneath longer term averages and still very tight.
So it’s back to relentlessly watching the weather. As Jon Driedger of FarmLink Marketing Solutions told me this morning, “I don’t think that anything here is going to make people say we’re not trading the weather any more, we’re trading these numbers.”
