What got seeded and what didn’t

Here’s a portrait you probably won’t want to hang in your living room:

Ugly weedThis weed was happily soaking up the sunshine on one of the many, many unseeded fields I came across yesterday as I drove across a wide swath of central and Interlake Manitoba. I saw lots of alarming and ugly things, and tonnes of sights to underline one of the main factors that’s bothering the ag markets right now: what exactly got seeded this spring?

Across the prairies, Great Plains of the U.S. and the U.S. corn belts, analysts, traders, farmers are trying to get a sense of how much got in, how much didn’t, how much got switched for another crop, etc. It’s a big bunch of wild cards that could knock prices around a bit depending on how they get played.

Almost every day sees a shift of value between corn and soybeans, with wet weather in the Midwest making corn prices rise and soybeans fall, as traders assume farmers will switch out of corn and into beans, and every day of good Midwest seeding weather causes a drop in corn prices and a rise in soybeans. Wheat lives in a bit of its own world, especially hard red spring wheat, but weather across the HRSW zone has moved that market around a lot.

Those are giant crops, with many eyes watching. What’s the state of our knowledge about how much of the smaller crops got sown and when? Probably a lot less. That, and the strength of corn prices, is probably why oats futures in Chicago have seen such a steady rise recently.

December 2011 oats
Farmers concerned about next year's pulse prices should spend more time contemplating transportation issues than worrying about acreage estimates, says one market analyst."Growers are growing, people are selling and no one is thinking about whether or not (the crop) could be moved," said Stat Publishing analyst Brian Clancey.He said the recently legislated railway revenue cap effectively limits the amount of commodities that can be exported out of Canada. The new grain transportation legislation and labor disruptions at ports are damaging Canada's reputation as a reliable pulse supplier, he said, which is leading to lower prices."Canada has a reputation discount right now."He said customers are unwilling to pay the product's real value because they are worried about shipping problems. Clancey's trade contacts say the reputation discount amounts to $10 per tonne. With this year's pulse exports pegged at 2.8 million tonnes, that's a $28 million discount coming directly out of farmers' pockets.Clancey was one of two speakers at last week's Pulse Days conference in Saskatoon who provided a medium-term outlook for Saskat-chewan pulse acreage. The two presenters agreed that the province will experience continued growth, but their average estimates are 2.5 million acres apart.Garth Patterson, executive director of Saskatchewan Pulse Growers, projects nine million acres for 2005, while Clancey forecasts a little less than 6.5 million acres of peas, lentils, chickpeas and beans.Clancey's more conservative estimate still calls for 41 percent more acres than the 4.6 million acres seeded to pulses in 2000. Patterson expects a near doubling of acres in five years.Patterson said Clancey isn't taking the substitution factor into account. He said with nitrogen prices on the rise, more farmers will substitute pulse crops for grain and oilseeds.Clancey contends that his projections are more accurate because they are based on demand estimates rather than extrapolating historical growth patterns."If you can't expand the market, then you can't expand the production."Neither speaker talked about how growth prospects will affect next year's pulse prices - the one piece of information the 1,700 farmers gathered at Pulse Days wanted to hear. But Clancey did drop a few hints in an interview after his speech.He said that in the last few years the pulse trade has been "shocked" by the massive growth in acreage. Producers don't seem to be reacting to market signals and that has perplexed the people who sell pulse crops for a living.Last year's pea acreage is a case in point. Pea prices were flat, but producers decided to plant almost one million more acres of peas in 2000."That initial sense of shock, 'My God, what are we going to do with this stuff,' resulted in prices being pushed down to levels that the trade felt were necessary in order to get it exported."That panicky reaction by brokers and exporters drove feed pea prices below where they should have been, he said.This year he expects pulse marketers to be better prepared to sell a sizable pulse crop, which could mean better prices.Clancey's short-term projection for Canada's 2001 pulse crop calls for a slight increase of about 31,000 acres, but a fairly significant rejigging of what is being seeded.He expects a five percent reduction in lentil acreage, a 15 percent decline in peas, nine percent increase in bean acreage, and for the second consecutive year, a near doubling of chickpea acreage.His five-year projection for Alberta and Manitoba calls for 840,000 and 636,000 acres of pulse crops respectively by 2005. That's a growth of 45,000 acres for Alberta and 214,000 acres for Manitoba, which pales in comparison to his forecast of 1.8 million new pulse acres in Saskatchewan.

The area I was driving around usually has hundreds of thousands of oats acres. This year, well . . .

Who knows?

So it makes sense the market is spooked about supply. On the other hand, lots got seeded well in the Yorkton oats heartland and east of the Saskatchewan border. So the situation might be OK.

As I wrote up a crop report today, I noticed that conditions, progress and situations vary wildly in every region, and that’s making it tough for crop forecasters to forecast. In some areas farmers are done seeding AND hardly done any seeding at all AND seeing nice emergence and development AND discovering seed rot and weak crops. So it’s a real mixed bag out there.

One thing’s for sure: no one really knows what’s out there right now, and when those answers become clear, markets will move. But which way . . .

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