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Canada grain area to dip for first time in 4 years

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Canada's sowings of grains and oilseeds are to fall for the first time in four years, undermined by lower prices and "burdensome" stocks, with some concerns over a hangover from a cold winter on the pace of spring sowings.

Canada's farm department, AAFC, trimmed by 125,000 hectares to 26.75m hectares its forecast for domestic sowings of crops from canola to wheat this year.

While only a small downgrade, it took the estimate for seedings below last year's 26.80m hectares, representing the first decline since 2010, when area tumbled by more than 3.5m hectares thanks to wet spring weather.

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

'Burdensome carry-in stocks'

Indeed, the department said that "burdensome carry-in stocks will be an over-riding issue for 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 department said.

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

The department 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.

'Rather late start of plantings'

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

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.

"It will take significant warm temperatures to get the ground warm enough to allow for grain germination.

"For the time being we have to expect a rather late start of plantings of malting barley and other spring crops."

Separately, the US 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.

On the pulses

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.

Sowings of dry peas are forecast to increase by nearly 10% to 1.5m hectares, "because of higher returns relative to other crops, and continued recognition of dry peas as part of a crop rotation plan", the department said.

Lentil sowings will rise 13.6% to 1.1m hectares "due to competitive returns relative to other crops".

By Agrimoney.com

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