WINNIPEG (Dow Jones) — The record-sized area planted to canola in the Statistics Canada acreage report released early Thursday caught more than just a few individuals by surprise.
“Even with flooding and excessively wet conditions for planting it was perceivable that canola area could have easily topped the 20 million acre level and came that much closer to beating out the all wheat projections,” Ken Ball, a broker with Union Securities in Winnipeg, said.
Ball said the estimates provided by Statistics Canada will be backtracked by the industry to reflect the extremely wet conditions in parts of the western Canadian prairies as well as continued flood conditions.
“I think most industry participants will back off the canola acreage estimate by at least 20{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}, if not more, to reflect those conditions,” he said.
Statistics Canada in its acreage survey for the period ended June 3, pegged canola area in Canada at 19.799 million acres. This compares with pre-report expectations that ranged from 17.250 million to 18.250 million and the StatsCan March 31 projection of 19.225 million. In 2010, actual canola area totaled 16.818 million acres.
“The acreage results for canola were definitely expected to have a bearish impact on prices,” Ron Frost, an analyst with Frost Forecast Consulting of Calgary, said. “Even backing off those numbers to take into account area that ultimately did not get planted due to the excess moisture and canola fields that have been flooded out, that is still a lot of canola.”
Frost said the big question now facing canola is how much area will actually make it to harvest time.
“The large canola estimate appears to reflect the idea that producers, who were left with very little time to be eligible for crop insurance, took to the skies and threw as much canola onto their fields as they possibly could,” Mike Jubinville, an analyst with ProFarmer Canada said.
He felt that coming up with an appropriate production estimate, given the aerial seeding attempt, will be the next big question mark.
Stats Canada estimated 2011 all-wheat area in Canada at 23.568 million acres. This compares with pre-report estimates of 21.5 million to 23.5 million acres and the March 31 forecast from the government agency of 24.724 million. In the spring of 2010, all-wheat area in Canada totaled 21.065 million acres.
Frost said the durum estimate in the all-wheat projection will be significantly lower, as will the forecast for spring wheat area.
“A lot of the area that has been hardest hit by the excess moisture is prime durum growing country, and to tell you the truth, durum plantings will have been lucky to hit the 3.0 million acre level and not the 4.3 million seen in the Stats Canada projection,” Frost said. He felt that durum area needed to be backed off by at least 1.0 million to 1.25 million acres.
The estimates for oats and barley were also seen as being overly large, as here, too, some of the key growing areas of western Manitoba and eastern Saskatchewan were still dealing with excess moisture if not under water still, Jubinville said.
Frost said if there had been some sort of weather break in early June, the projections for oats and barley probably would have been more in line.
Jubinville said that of all the numbers, barley was one of the few that should have some positive spinoff for prices.
Stats Canada pegged 2011 Canadian oat area at 3.814 million acres, which compares with their March 31 forecast of 4.056 million and pre-report expectations of 3.000 million to 3.700 million. In 2010, Canadian oat area was 2.913 million acres.
Canadian barley area in 2011 was put at 7.139 million acres by Stats Canada, which compares with its March projection of 7.833 million and pre-report ideas ranging from 7.400 million to 7.750 million. In 2010, Canadian producers seeded 6.911 million acres to barley.
“If you backtrack the area off the barley estimate from the government agency, the potential for an extremely small barley crop exists,” Jubinville said.
Source: Dow Jones
Posted by Haylie Shipp
