Canada Markets

Statistics Canada released its March Intentions of principal field crop areas on Thursday morning, the first look at the 2015/16 crop year. This report is based on data obtained between March 18 and 31 and could be viewed as questionable, given the ongoing indecision on the part of producers and the weakness that has affected certain markets since this data was collected. As well, this data was collected from the provinces of Quebec, Ontario, Manitoba, Saskatchewan and Alberta only, with an estimated 2 to 4% of total acreage expected in the provinces not reporting this round which will be included in a later report.

The report can be summarized by an expected increase in acres for cereals such as wheat, oats, barley and corn, while soybeans and canola are expected to see a dip in acres. As expected, producers also intend to seed more acres to peas and lentils.

Canada's all-wheat acres are expected to see an overall 3.9% increase to 24.765 million acres. A loss in winter wheat acres in the eastern Prairies, due to last year's excessive moisture, was more than offset by a 3.4% increase in spring wheat acres to 18.004 ma, a two-year high, along with a 15.8% increase in durum acres to 5.5 ma which would be a six-year high.

Both estimates fell within expectations of pre-report estimates reported by Commodity News Service, although the durum acreage far exceeded the 5.189 ma estimate released by Agriculture and Agri-Food Canada. Current weakness in both old-crop and new-crop durum bids may limit the increase in expected acres while both international and North American buyers have little reason for aggressive bidding of new crop.

Barley acres are expected to increase 10.2% to 6.478 ma, after reaching a record low 5.880 ma in 2014. Barley exports for 2014/15 are viewed as favorable while this morning the International Grains Council reported the eighth consecutive record volume in the global malt trade in 2015/16. This increase is near the lower-end of pre-report estimates but will be welcome news for the feed industry that has experienced a lower trend in acres since 1971 when close to 14 million acres were planted.

The estimate for acres planted to oats in 2015 was above expectations, up 30.3% to 3.645 ma. This could be the highest level planted since 2009 and compares to pre-report estimates ranging from 2.7 ma to 3.4 ma. This could be viewed as surprising as the March 31 December oat futures closed at $2.73 1/2/bu and certainly not conducive to an increase in interest in oats. Recent developments have a prairie oat mill refusing to accept new-crop oats sprayed with glyphosate, widely used to protect grades for milling markets; this could entice producers to abandon plans to expand their acreage. New-crop oat futures are 7 cents lower at $2.67 1/4/bu in mid-morning trade.

Pre-report estimates suggested that the acreage planted to canola would be a wild card, ranging from a cut in acres of more than a million acres to an increase of more than a million acres. Those leaning towards a cut were right, with canola acres expected to fall 4.5% to 19.416 ma, a four-year low. While Manitoba is expected to boost acres slightly, Saskatchewan acres are expected to fall 4.2%, while Alberta acres are expected to fall 7.7%. The new-crop November future has posted a modest jump of $3.00/mt to $449/mt in mid-morning trade, although has backed down from session highs. The November/January spread has weakened to a carry of $2.80/mt, still well-below full carry and a sign of commercial bullishness, while the January future has returned to a premium over the March, a further bullish signal from the commercial trade and a signal of concern.

Soybean acres in Canada are expected to dip for the first time in eight years, reported by Statistics Canada to be 3.4% lower at 5.375 ma. A drop in acres in Ontario and Quebec are poised to outweigh the gains in the West, with Manitoba producers expected to seed a record acreage of 1.3 ma while Saskatchewan producers are expected to increase acres by 24% to 335,000 acres. Canadian producers' actions are expected to be counter to U.S. producers who plan to plant more soybeans and less corn.

As expected, dry pea and lentil acres will be higher on the Prairies, although today's report placed farmer's intentions at the lower end of pre-report estimates. Dry pea acres are forecast at 3.830 ma, up .9% while lentil acres are expected at 3.350 ma, up 7.7%. Pre-report estimates showed dry peas expected as high as 4.5 ma while lentil acres were estimated as high as 3.8 ma. Current estimates would suggest record lentil acreage in 2015 and the second highest pea acreage next to the estimated 3.985 ma seeded in 2008. At the same time, the pulse trade will be expecting a further increase in acres in the future with suggestions made that the switch towards pulses continues to take place to this day. The rapid pace of 2014/15 exports and the resulting tight carry-outs expected in the current crop year combined with adverse weather in India are expected by growers to provide opportunities ahead.

In smaller crop data, flaxseed acres are expected to jump 4.8% to 1.630 ma, which would be the highest acreage planted since 2009. This acreage could still be understated. Canary seed acres on the Prairies are estimated to be up 12.7% to 310,000 acres, a three-year high but again, a number which could be understated. An expected 36% drop in mustard acres to 320,000 acres would be the smallest acreage planted since 295,000 acres were reported for 1992, which will keep buyers on their toes. Sunflower acres are expected to increase 66.7% to 125,000 acres, the highest level in five years.

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

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