Canada Markets

Agriculture and Agri-Food Canada has put on a brave face by forecasting an increase in 2015 seeded acres of almost every crop in its latest release of Canadian supply and demand data. The primary driver of this expansion is the expected return of acres lost to excessive rains and flooding in 2014 in eastern Saskatchewan/western Manitoba, although this notion is being questioned by producers with sloughs that will not be seeded.

On an acreage basis, the largest year-over-year increase in AAFC's estimated acres is expected for barley, up roughly 544,000 acres; durum, up roughly 440,000 acres; and canola acres which are estimated to grow nearly 432,500 acres.

AAFC's durum estimate of 5.189 million seeded acres falls below the range of estimates released by Commodity News Service, which suggests a range of 5.25 to 6.25 million acres to be seeded. The question remains whether producers will respond in this fashion. DTN's National Durum Index (U.S. data) has trended from $8.31 per bushel Aug. 1 of this crop year to a high of $13.33/bu on Nov. 4, while has since trended to a low of $8.09/bu at last night's close. Old-crop bids in Western Canada are under pressure and at an extreme hard to find as buyers look forward to new crop.

Canola acres are also viewed as a contentious issue. Despite AAFC's estimated increase of over 400,000 acres, pre-report estimates from Commodity News Service suggests that canola acres are expected to range from 19 ma, down 1.3 ma from last year, to 21.5 ma, up 1.2 ma. Producers' concerns include the high cost of seed, fertilizer and other inputs, rotation issues which may prevent any expansion of acres and the potential for a record U.S. soybean crop to drag oilseed prices even lower than current levels. New crop futures spreads suggest concerns exist among commercial traders, with the November/January spread trading at a $.90 per metric ton carry and the January/March carry at $.30/mt, well below full-carry and a sign of commercial bullishness over new crop supplies, despite an old-crop carry-out which could be approaching 2 million metric tons.

It is widely expected that producers across the Prairies will plant an increased acreage of both peas and lentils. While AAFC has estimated an 11% increase in lentil acres to 3.459 ma, within the range of estimates suggested by Commodity News Service, one industry rep has suggested lentil acres will be greater than 4 ma, above the current range of industry estimates and the switch towards pulse crops is continuing on a daily basis. Producers could increase pulse acres more than expected.

While Canada's all-wheat estimate for seeded acres is expected to be higher than last year, this is due to the impact of an expected increase in durum acres. Wheat acres other than durum are expected to slip slightly according to AAFC to 19.323 ma. A widening new-crop basis across the Prairies, calculated at 25 cents under the December for October delivery, leaves the average bid for CWRS in the $5.50/bu range on the Prairies and may fall short of maintaining acres. Current global forecasts for 2015/16 indicate a lower level of global production expected although global markets appear to be well supplied and may provide ongoing challenges for North American exports. Producers could cut wheat acres more than expected.

Regardless of whether Thursday's market contains a surprise or not, previous blogs have discussed tendencies in government data to consider. Over the 2010-through-2014 period, Statistics Canada's March Intentions report tends to overstate the acres planted to cereals such as spring wheat, durum, barley and oats as well as flaxseed, while canola, soybean and lentil acres tend to be understated.

Statistics Canada will release its findings on April 23 at 7:30 Central Time.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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