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Published May 10, 2010, 03:03 PM

Canadian wheat, canola acres affect US farmers

Canadian farmers are expected to plant more canola and spring wheat and a lot less durum than a year ago.

By: Jonathan Knutson, Agweek

Canadian farmers are expected to plant more canola and spring wheat and a lot less durum than a year ago.

That will affect what U.S. farmers plant and the prices they receive for those crops, although the impact may be only modest.

Canadian canola acreage is pegged at 16.9 million, up 4.4 percent from a year ago, according to Statistics Canada’s planting intentions report.

With durum prices sluggish, Canadian farmers are expected to plant only 3.7 million acres of the crop, down a whopping 35 percent from last year.

Acreage of spring wheat, Canada’s biggest crop, is expected to rise 7.1 percent to 18.1 million acres.

Canada is the world’s largest exporter of all three crops. That’s important to U.S. farmers in the northern Great Plains, particularly North Dakota, which leads the nation in production of the three crops.

Even so, don’t read too much into the Canadian wheat numbers, says Jim Peterson, marketing director of the North Dakota Wheat Commission in Bismarck.

While Canadian acreage will affect U.S. wheat production and prices, “the biggest factor will be Mother Nature,” he says.

Reasons to plant durum

Canada accounts for about half of world durum exports, roughly four to five times as much as the United States, so the big reduction in Canadian durum acreage could encourage U.S. producers to plant more durum, Peterson says.

Additional incentive to plant durum comes from the U.S. Department of Agriculture’s 2010 loan rates.

The rates are much higher for durum than spring wheat across North Dakota, says Dwight Aakre, North Dakota State University Extension Service farm management specialist in Fargo.

The premium for durum over hard red spring wheat favors planting durum in areas where the two classes of wheat can be expected to yield comparably, he says.

Loan rates play less of a role in planting decisions in farms enrolled in the Average Crop Revenue Election program, where the rates are below the expected market prices, Aakre says.

This spring, USDA predicted that farmers in North Dakota — which accounts for about two-thirds of U.S. durum production — would fall to 1.5 million acres from 1.65 million acres in 2009 and 1.8 million acres in 2008.

That reflects current prices for the crop. Durum, which normally fetches a premium to spring wheat, currently brings about $4 per bushel, compared with about $5 for spring wheat.

The higher durum loan rate and anticipated cut in Canadian acreage likely will cause North Dakota durum acreage to exceed USDA’s prediction, although probably not by as much as some people might think, Peterson says.

Many farmers have purchased seed for other crops and are unlikely to switch to durum, he says.

Canola acreage affected?

USDA predicted this spring that U.S. farmers will plant 1.2 million acres of canola, with North Dakota accounting for 1 million of those acres.

Farmers in the state planted 730,000 acres of canola last year.

The projected increase in Canadian canola acreage this year likely won’t have much affect on U.S. canola plantings, says Barry Coleman, executive director of the Northern Canola Growers Association in Bismarck, N.D.

Most everyone was expecting canola acres in Canada to increase, and the Statistics Canada estimate of 16.9 million acres was below what many analysts predicted, he says.

Also, industry demand for canola — and prices for it — remain strong, he says.

Canola generally is selling for more than 16 cents per pound across North Dakota.

There are questions about Canada’s long-term ability to increase its canola production substantially, which bodes well for the crop’s future in the United States, he says.