March 24, 2014

 

Canada's grain acreage to decline for first time in four years

 

 

Due to lower prices, 'burdensome' stocks, and concerns over recovery from a cold winter for spring sowings, Canada's grains and oilseeds sowings are to expected to fall for the first time in four years.

 

The Agriculture and Agri-Food Canada (AAFC) has cut its 2014 forecast for domestic sowings of crops, including rapeseed and wheat, to 26.75 million hectares, a reduction by 125,000 hecatres.

 

The downgrade reflected lower expectations for barley and corn sowings. The AAFC was already factoring in a 65% drop in sowings of wheat, the modest widely planted crop due to lower prices and high carry-in stocks.

 

Indeed, AAFC said that "burdensome carry-in stocks will be an over-riding issue in 2014-15" for Canadian crop markets in general, reaching record levels in corn, which with the development of improved seed has become a widely-grown crop in recent years, overtaking oats in sowing programmes.

 

While AAFC forecast that domestic crop prices will feel some support from a weaker Canadian dollar, corn values "are forecast to decrease due to abundant global supply, especially in North America", the ministry said.

 

Due to large supplies of coarse grains and a general downturn in grain commodity prices, domestic and world prices are forecast to decrease for barley.

 

The AAFC made only small upgrades to estimates for Canadian barley and oats inventories at the close of 2013-14, and none to other crops, despite the well-publicised delays to Canadian logistics from cold weather on rail transport and, most recently, a truckers' strike at the port of Vancouver.

 

The revisions to sowings estimates also come amid some concerns that the recovery from a harsh winter, billed as the worst in 20 years, presents a hurdle to sowings.

 

While winter has "finally started to break in Western Canada and the melt has begun, some areas of Manitoba have reported their frost depths are twice what is typically normal," Darren Smith at RMI Analytics said.

 

Separately, the US National Oceanic and Atmospheric Administration (NOAA) weather service forecast a risk of moderate flooding this spring on the Red river, which flows into Manitoba and Lake Winnipeg, as snow melts.

 

Nonetheless, AAFC maintained expectations of a rise in Canadian crop sowings overall this year, reflecting ideas of a rise in pulse plantings offsetting most of the drop in grain seedings.