2014 Wild Oats Planting SurveyWild Oats subscribers were asked what they planted in 2013 and their intentions for 2014. The 2014 survey included 89 western Canadian farmers cropping 291,000 acres. Responses were received in February.
By: John Duvenaud, Agweek
WINNIPEG, Manitoba — Wild Oats subscribers were asked what they planted in 2013 and their intentions for 2014. The 2014 survey included 89 western Canadian farmers cropping 291,000 acres. Responses were received in February.
The Wild Oats survey shows a transition from wheat, durum and barley into canola. A return to average yields will cause ending stocks to drop for all major crops. Our commercial elevator and rail system will not be as overwhelmed moving supplies during 2014 to ’15.
Canola production, using a five-year average yield, has the potential to reach 16.4 million metric tons, down from 17.9 million last year. Given the larger carryout from the 2013 to ’14 crop year, the market will not be as sensitive to growing conditions with the larger acreage. Available stocks will remain burdensome throughout 2014 to ’15 and basis levels will continue to be relatively wide. Lower production will result in a year-over-year decline in ending stocks and the market will slowly become more correlated with the bean complex.
Barley production has potential to drop to 6.3 million metric tons, compared with 10.2 million in 2013. Using the lower acreage estimate, the function of the domestic barley market will be to ration demand in the 2014 to ’15 crop year. Domestic prices will trade at a premium to world values and the market will need to encourage U.S. corn imports. The barley market will move in line with the U.S. corn market.
Spring wheat, down nearly 20 percent, might be an extreme, but it definitely shows the trend. Stocks will tighten in 2014, which will cause basis levels to narrow. High protein will remain snug, resulting in wider protein premiums. During the summer and fall, the market might incorporate a risk premium because of the uncertainty in production. We are 20 percent sold on the 2014 crop, but will likely advise the bulk of our sales recommendations in the latter half of the crop year.
Durum acres are expected to be down sharply. While this year’s carryout will be sharply above the 10-year average, ending stocks for 2014 to ’15 will be more in line, causing the premium over milling wheat to increase.
The market will be very sensitive to growing conditions, as Canada could experience a sharp year-over-year decline in production. Similar to spring wheat, we are 20 percent sold on the 2014 crop, but we will be patient on marketing recommendations during 2014 to ’15.
Red lentil plantings will be strongly higher, while greens will be flat. Reds have been easier to move all winter. With prices for canola and wheat falling and fertilizer more expensive, pulses are looking better and better. This is the time to bring rotations back into line.
Flat green plantings suggest there may be a contrarian play here.
Lentil carryovers are already modest and, in any case, old-crop greens don’t compete for the high-end market.
Peas, up by 10 percent, is the same story. Prices aren’t bad, movement at least happens and rotations are important. There is even more of a move into greens after a sharply bigger green crop this past summer. If you’re planting greens, consider doing some contracting. New crop green contracts are available around $7.50 per bushel, while it’s hard to get $5 on yellows.
Canary, up 20 percent, rings about true. New crop contracts are not especially attractive. An increase this big could keep the lid on prices.
Mustard plantings will be sharply higher. Mustard has had relatively stable prices, while most crops hit an air pocket. Carryout stocks will be relatively tight, so we have some room for increased production.
Demand, however, is flat and stable, so any big increase could see prices ease.
Flax production is increasing around the world but Canada is still the most important player. An increase of 70 percent is unlikely but does raise a caution.
New-crop malt barley
Interior bids are in the range of $4 to $4.35 per bushel.
Domestic malting companies have shown sporadic bids as they start to make new crop malt sales. At the same time, grain companies are waiting for farmer commitments before making export sales. Prices on the world market have remained flat throughout the crop year, and it is prudent to start making new crop sales at this time.
The malt barley premium over feed will depend on the quality of the upcoming crop. If Canada has a high-quality crop for the second year in a row, this malt premium will narrow. Domestic maltsters usually show stronger prices in the spring as they secure supplies. During fall, farmers are anxious to move malt barley off the combine and demand becomes saturated.
There are limited homes for old crop. The export market is contending with Australian and Argentine supplies. We might see some additional export business to China during the summer months, but this will depend on companies’ access to rail cars. At this time, exporters do not want to make sales until the logistical situation clears up.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, either call 1-800-567-5671, e-mail firstname.lastname@example.org or visit canadagrain.com.