Much like the U.S. Department of Agriculture's Prospective Plantings Report that is released at the end of March each year, the Statistics Canada Seeding Intentions Report gets a lot of attention in late April.
Farmers' expected plans for planting shape market expectations before any crop sample or yield estimate can, and provides an early picture for the coming crop year. This year, there are plenty of things that farmers had to think about that are outside of the normal considerations such as crop rotation plans, prices and input costs.
Some of those things include the tumultuous trade relationships with China, unknown plans for India's pulse support of farmers and associated trade restrictions, and growing global wheat supplies after a bad year in 2018. Chinese canola purchases have slowed to zero, leaving supplies quite large in Canada as geopolitical tensions and some quality issues have moved China to effectively halt imports. On top of that, African swine fever is killing hogs in such a way that future feed demand is uncertain.
In India, the government continues to make moves to restrict imports and support domestic prices for farmers. This could lead to further demand fluctuations as those policies change. And wheat markets have been getting hammered as global supplies are good, even with last year's issues in many growing regions. And, production is expected to rebound in 2019, swelling global wheat stocks further.
Planting decisions are not always easy in a normal year, but 2019 is bringing some unique challenges.
Wheat area in Canada is expected to increase by 3.8% from a year ago, totaling 25.7 million acres. This holds a 12% bump in spring wheat area to 19.4 million acres. Other grains are set to increase in 2019 as well, like corn and oats.
In the U.S., the winter wheat crop is in incredible shape, with the Department of Agriculture reporting 62% of the crop as good or excellent from last week's 60%. All the rain across the Plains is a hassle for spring planting, but it definitely favors the winter wheat crop's early development.
Spring wheat planting has been slow, however. The weekly report showed national planting is just 5% done compared to the five-year average pace of 22%. Farmers need a serious break in the rain to get fields dried for work, and the forecast simply does not have that until mid-May.
All in all, wheat prices have been under a lot of pressure. All three classes of wheat traded to new lows this week. Both good domestic production expectations and large global stocks have weighed on the markets. Speculative funds are short, and keeping pressure on.
Durum wheat prices have been steady in Minneapolis. That market has been depressed and depressing, with no real movement in more than a year.
Large supplies are making it impossible to rally. U.S. farmers did their part, and have planned to cut acreage in 2019. Canadian farmers are planning to follow suit. StatsCanada reported an expected drop to 5.0 million acres for durum, a drop of almost 19%. Many U.S. and Canadian farmers will have to deal with wet fields for early planting, too.
No surprise, but canola acreage is expected to fall in 2019. Prices have been weak for the last several months, and with no trade resolution expected in the near future, farmers are looking to avoid big losses and are reducing area for canola.
Farmers will cut area to 21.3 million acres this year, a 6.6% drop from last year. Similarly, soybean planted area in Canada will fall 10.7% from a year ago. Both crops face tough export barriers that many just do not wish to deal with for a second straight year.
Pulses are mixed in terms of plantings, with lentils set to decline while field peas will increase. The StatsCanada report showed that lentil area will fall 9.6% to 3.4 million acres. The aforementioned trade issues with India as a result of their import policies make lentils a less certain bet. Field peas should see a 11.6% bump.
Barley area in Canada is expected to climb 10.2% from a year ago, to total 7.2 million acres. Feed grains are seeing a good boost at the expense of oilseeds. In the U.S., barley planting has been lagging. 17% of the crop is done (up from 8% last week) compared to the five-year average pace of 29%.