Survey: Plantings down less than 1 percent
WINNIPEG, Manitoba -- The Wild Oats Planting Survey is the first surveyed intentions outlook for western Canadian spring plantings. In February, we asked Wild Oats subscribers their acreage last year and intended acreage this year, with responses...
WINNIPEG, Manitoba -- The Wild Oats Planting Survey is the first surveyed intentions outlook for western Canadian spring plantings. In February, we asked Wild Oats subscribers their acreage last year and intended acreage this year, with responses from 104 farmers cropping 330,000 acres.
Canola markets are starting to focus on the 2015 acreage. Traders and analysts at the Grainworld conference in Winnipeg, Manitaba, expected canola acres to be relatively unchanged, compared with 2014. The Wild Oats acreage survey showed canola acres down 2 percent. Unchanged or slightly lower acreage makes the 2015 to '16 fundamental structure extremely tight. The market cannot afford a crop problem. Comments from the Grainworld conference suggest many farmers are undecided about their 2015 seeding intentions and the canola market is incorporating a risk premium because of the potential for lower acres. We have seen a sharp rally in the November canola futures. Expect this to continue until 2015 acreage is more certain.
Barley markets are consolidating. Analysts at Grainworld were relatively friendly to old crop barley prices because of the lower 2014 production.
For 2015 to '16, barley acres are expected to be up 20 percent, according to the Wild Oats survey. While this might be on the high side, this definitely gives us a clearer picture of the new-crop fundamentals. Barley production has potential to finish near 8.3 million metric tons, compared with 7.2 million metric tons in 2014. Larger production will cause the market to come under pressure during the harvest season and the market will function to encourage demand during the first half of the crop year. Our sales recommendations for feed barley will focus on the latter half of the crop year. For malt barley, we will be more aggressive in the first half of the crop year. Once the domestic demand is covered, malt barley prices will function to encourage demand through lower prices with offshore sales. Remember, we are 20 percent sold on new-crop malt barley.
Durum acres are rising. Favorable returns this past year have farmers indicating a surge in durum acres of nearly 40 percent. Canadian durum production could finish at more than 6.5 million metric tons, compared with 5.2 million in 2014.
Durum stocks could become extremely burdensome and cause durum to trade at a discount to hard red spring wheat. The function of the durum market will be to encourage demand through lower prices during 2015 to '16.
Canadian durum is the last global crop to be harvested. Durum has been hot since last October after rains hit Saskatchewan at harvest.
Plantings are up around the world. New crop harvest starts next month in Mexico, in April in California, May in the Mediterranean and June in France. By August there will be lots of durum.
Spring wheat acres are lower. Non-durum spring wheat acres are expected to be down nearly 6 percent from 2014. Canadian farmers are responding to the lower price structure similar to farmers in other major exporters.
Lower Canadian acres, lower U.S. winter wheat acres along with adverse conditions in Russia and Ukraine are all factors, which should result in slightly higher prices for the 2015 to '16 crop year.
Oats acreage up 52 percent reflects decent, not great, prices in the past year. And those prices are rising. Maybe more important is the fact that, in a year when most crops pencil at around breakeven, oats are one of the cheaper crops to grow.
Flax up only 3 percent probably means every farmer who wants to grow flax is already growing it. Prices are good, but only about where they were last spring.
Lentil plantings up 8 percent makes sense. Lentils are keeping a lot of farms going. The survey suggests a decrease in green plantings and an increase in reds. Availability of seed will be an issue. Consider planting greens, especially Estons, as a contrarian play.
Pea plantings down 5 percent seems unlikely, given that we'll be out of peas before harvest and the world is running on empty. Acreage has been climbing for some time and disease pressure might be the restriction.
Market demand certainly is not.
Canary up 25 percent will send a chill up your spine. Still, supplies have shrunk in the past few years enough to empty a lot of bins. This increase may not have a commensurate effect on prices. Canary exports have been exceeding total supplies for three years now so on-farm stocks could be getting tight.
Soybeans down 9 percent makes sense with the drop from $14 per bushel to $10.
Western Canadian soybean plantings are insignificant as a price determiner so it doesn't matter what you do with soybeans.
Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, call 1-800-567-5671 in Western Canada and North Dakota, 204-942-1459 for all others, or e-mail firstname.lastname@example.org or visit canadagrain.com.