Major Canadian wheat area hits 39-year low

 

 

Wheat plantings in Canada's agricultural heartland are to fall to their lowest for nearly 40 years thanks to the "extraordinary" rains which may force growers to abandon an area bigger than Denmark.

 

The data from the Canadian Wheat Board (CWB), the grain marketing giant, sent prices of US spring wheat up nearly 8%.

 

Wheat farmers in Canada's Prairies, who are responsible for more than 90% of the country's production, will sow 19.2 million acres this year, the smallest area since 1971, the board said.

 

While some fall in plantings, particularly of durum, had been expected due to lower grain prices, the 18% cut is three times the size that analysts had pencilled in early in the spring. Indeed, 8.25-12.5 million acres of cropland will be abandoned, the largest area to go unsown since Canada was subsidising set-aside programmes some four decades ago.

 

Across the Prairies, 22% of crops remain to be seeded. Plantings are normally complete by now.

 

Saskatchewan, Canada's biggest agricultural province, had suffered worst, with 36% of fields unplanted and prospects for additional seeding dim. Only 5% of land has been sown in some areas of the state, according to provincial data.

 

The lower plantings were likely to feed through into a 22% slump to 18.9 million tonnes in the region's wheat production, assuming the yield of 37.5 bushels per acre suggested by CWB models.

 

Even assuming a decent yield in the rest of the country, the world's second biggest wheat exporter, the figures imply a national crop significantly lower than the 24.5 million tonnes forecast by the USDA among benchmark crop estimates released on Thursday (June 10).

 

The data helped revive US wheat prices after a weak start, notably those in Minneapolis, which trades spring wheat rather than the soft red winter wheat traded in Chicago.

 

Minneapolis's July contract jumped 7.7% to US$5.28 a bushel at one stage before retreating to close up 2.3% at US$5.04 ¾ a bushel; while Chicago's July lot ended 1.7% higher at US$4.40 ¾ a bushel.

 

In Winnipeg July canola, the rapeseed variant which also stands to lose out from weak spring sowings, ended up CA$1.40 at CA$395.40 a tonne, completing its best weekly gain, of 5.2%, in six months.