February 1, 2011

 

Canada's grain sowings to remain low despite high prices

 

 

Canada's grain sowings will stay beneath historic levels in spite of soaring global prices, with rapeseed most likely winning record plantings in the spring's battle for acres.

 

Canada's farmers will plant some 1.3 million hectares more grains for the 2011 harvest than they did for last year's, when wet weather forced farmers to leave huge areas unsown, besides destroying much of what did get planted.

 

Even so, at 15.3 million hectares, the total grain area will be well below recent historic levels, data from Canada's farm ministry showed. Canadian grain seedings averaged 17 million hectares in the three years from 2007-08 to 2009-10, before last year's rain-damaged season.

 

Barley area is set to remain particularly low, relative to those years, although wheat sowings too, at 9.29 million hectares, will remain below average, reflecting projections of a retreat in value, as measured by returns paid by the Canadian Wheat Board, which markets the majority of the country's harvest.

 

Wheat prices will fall by some 6% to CAD295 (US$295.53) a tonne for non-durum wheat, "because of the higher Canadian and world supply, expected improvement in the average quality of hard wheat in Canada and Australia, expected increased competition in world markets and the forecast stronger Canadian dollar", the farm ministry, Agriculture and Agri-Food Canada (AAFC), said.

 

Canada is typically the third-biggest wheat exporter, after the US and the European Union bloc.

 

However, sowings of oilseeds look set to continue a long-term upsurge, with soy sowings hitting 1.55 million hectares, "due to attractive prices", while rapeseed plantings will jump 10.2% to a record 7.5 million hectares.

 

"Canola (rapeseed) prices are forecast to decline slightly under pressure from lower world soy and palm oil prices, but returns will be supported by continued strong demand," AAFC said.

 

Indeed, Canada's rapeseed stocks are, thanks to growth in both domestic use and exports, to weaken further in 2011-12 to 850,000 tonnes, helping support prices at CAD500-540 (US$500.72-$540.78) a tonne, compared with CAD540-580 (US$540.78-$580.92) a tonne expected for the current 2010-11 season.

 

The forecast tallies with a projection two weeks ago from Viterra, the grain handler that projected Canadian farmers will use some 18 million to 19 million acres (7.3-7.7 million hectares) for sowing rapeseed.

 

However, expectations are being kept in check following significant snowfalls in many areas on top of ground already saturated by heavy summer and autumn rains.

 

Officials in the key growing province of Saskatchewan warned last week of potential floods when the thaw sets in.

 

Authorities in Manitoba have said that "there are some preconditions in place" for flooding, notably around the Red River, whose melt-bloated spring water levels often present difficulties for spring sowings in the state and in North Dakota.