Canada Markets

The USDA's Foreign Agricultural Service April 29 Global Agricultural Information Network (GAIN) report has looked at Canada's crop production potential, with observations and estimates derived after Statistics Canada's March intentions of principal field crop areas survey was conducted between March 18 and March 31, with this report released on April 23.

While the report agrees with the notion of more wheat acres planted in Canada in 2015, they are looking at a smaller increase in all-wheat acres given reports of slow seed sales and in some cases lack of seed, price deterioration in the durum market and wheat's overall lack of competitiveness with competing crops. This analysis may also fit with industry claims that Statistics Canada underestimated the potential for pea and lentil acres on the prairies.

Harvested acres were forecast to be 2.5% higher than estimated for 2014, which compares to Statistics Canada's estimate of a 3.9% increase in total wheat seeded acres, including surviving winter wheat. Total production of all wheat is estimated at 29.550 million metric tonnes, just 0.9% higher than year-ago volumes and slightly higher than the five-year average of 28.581 mmt. Canada's exports of all-wheat are expected to fall to 22.2 mmt in 2015/16, which compares to AAFC's 2014/15 export estimate of 22.9 mmt. The report also pegged Canada's carryout for all-wheat at 4.293 mmt, which is down from AAFC's 2014/15 carryout estimate of 6.2 mmt, representing the tightest carryout seen in data going back to 1997.

While USDA's take may be on the mark with a lower-than-expected durum acreage given the recent price trend, Monday's Canada Markets blog suggested the possibility of more than expected durum acres given the early start to seeding in southern Alberta and areas of southern Saskatchewan. Time will tell.

The attache report also fails to see the 30.3% increase in oat acres materializing in the spring of 2015 that has been suggested by Statistics Canada. Estimates are suggesting a 16.6% increase in acres to 3.262 million acres, with overall flat demand due to rising U.S. supplies affecting producers' actions. Production is estimated at 3.2 mmt, 10% above last year and just slightly above the 3 mmt five-year average. Exports are expected to slip from 2014/15 as U.S. supplies increase. Ending stocks are estimated at 909,000 mt, a 25.4% increase from AAFC's 2014/15 ending stocks estimate and above the five-year average of 847,180 mt.

The report is in agreement with the 10.2% increase in barley acres estimated in the Stats Can report. Production of 7.875 mmt has been estimated, which would be 10.6% above last year's record-low production level. USDA sees further rationing due to tight supplies next year, which is expected to affect Canada's export potential. Ending stocks are expected to rise to 850,000, up 200,000 mt from AAFC's current 2014/15 carryout estimate.

The report also seems in agreement with Statistics Canada's estimate for 6% more corn acres to be planted in Canada in 2015. Their production estimate is pegged at 12.245 mmt, up 6.6% from 2014/15 and just slightly below the five-year average. Ending stocks are expected to fall to 1.182 mmt, a 21% drop from 2014/15 and a historical low.

Further 2015/16 estimates will be released by AAFC later this month, while USDA will release its first official global data on May 12 in its monthly WASDE report. At the same time, as stated in a recent blog written by DTN's Todd Hultman, "Weather Speaks," and will remain the primary focus going forward.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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