You are here: Home Columns Crops Market Advisor Market Advisor: Shifting Canadian Plantings May Impact N.D. Crop Prices
 
Document Actions

Market Advisor: Shifting Canadian Plantings May Impact N.D. Crop Prices

Images
Frayne Olson - NDSU Crops Economist & Marketing Specialist Frayne Olson - NDSU Crops Economist & Marketing Specialist
The three most noteworthy shifts in 2010 Canadian planting intentions are in durum, spring wheat and canola.

By Frayne Olson, Crops Economist & Marketing Specialist

NDSU Extension Service

On April 26, 2010, Statistics Canada released the first survey-based estimate of prospective plantings for Canadian farmers. This report is important for North Dakota farmers because many of the crops grown in the state also are significant crops in Canada.

The three most noteworthy shifts in 2010 Canadian planting intentions are in durum, spring wheat and canola. The survey of 13,800 Canadian farms indicates a 35 percent reduction in durum wheat acreage, from 5.66 million acres in 2009 to an estimated 3.69 million acres in 2010. This compares with 2.55 million acres of U.S. durum planted in 2009 and a projected 2.22 million acres in 2010. To put this in another way, the expected reduction in Canadian durum plantings, 1.97 million acres, is equivalent to 89 percent of the total expected 2010 U.S. durum acres.

While this is a significant reduction in North American durum acres, cash prices may not respond much due to the large carryover of stocks in both the U.S. and Canada. In addition, the U.S. prospective plantings survey was conducted before the U.S. Department of Agriculture released the 2010 durum county loan rates. The significantly higher 2010 durum loan rates likely will increase U.S. durum acres above the previously reported 2.22 million acres and may result in more U.S. durum acres than planted in 2009.

As always, the growing-season weather will have a significant impact on yields and final production numbers. A weather problem in one of the key U.S. or Canadian durum-producing regions would produce a price rally because the market would need to allocate fewer bushels across the potential buyers. However, without a significant weather problem in a key durum production region, durum prices will remain under pressure.

Canadian spring wheat acres are expected to increase by 7 percent, from 16.93 million acres in 2009 to approximately 18.13 million acres in 2010. This is similar to the expected increase in U.S. spring wheat acres. In 2009, the U.S. planted 13.27 million acres of spring wheat and is expected to plant 13.91 million acres in 2010, which is a 5 percent increase. The increase in Canadian spring wheat acres is almost equal to the reduction in Canadian durum acres, suggesting a shift away from durum and into spring wheat.

Unfortunately, there is no shortage of spring wheat available in the domestic North American wheat market or world wheat market. The expected increase in 2010 spring wheat plantings will not help this situation. While there may be times when wheat prices rally, as the wheat market follows other commodity markets, the underlying supply and demand conditions for wheat will limit a price recovery.

Canadian farmers intend to plant the largest acreage of canola in history, an estimated 16.91 million acres. This is a 4 percent increase from the previous record of 16.20 million acres in 2009. This compares with U.S. canola plantings of 830,000 acres in 2009 and a projected 1.23 million acres in 2010. If realized, this would be the fourth consecutive year of increased canola plantings in Canada. This increase in acreage and potential production could become problematic if demand for canola oil and canola meal does not remain strong.

North American canola prices have been supported by a combination of steadily growing world demand for canola products and a fivefold increase in canola purchases by China in 2009. However, a recent dispute between China and Canada regarding blackleg contamination has slowed the pace of trade dramatically. Continued strong demand from China is seen as the key factor to supporting canola prices.

Barley plantings in Canada are expected to be down approximately 320,000 acres, from 8.66 million acres in 2009 to 8.34 million acres in 2010, which is a 4 percent reduction. U.S. farmers are expected to make similar reductions in barley acres, with a drop of 300,000 acres from 3.57 million acres in 2009 to 3.27 million acres in 2010, which is an 8 percent reduction. One significant difference between the Canadian and U.S. barley industries is that approximately 75 percent of Canadian barley is used for feed, while approximately 75 percent of U.S. barley is used for malting.

A reduction in North American barley plantings is needed to help reduce the large carryover in malt barley stocks. However, it is not clear if the cutback in plantings will be great enough to strengthen U.S. malt barley prices.

In 2009, Canada planted 3.76 million acres of dry peas, which is significantly greater than the 2009 U.S. planted acreage of 860,000 acres. Both Canadian and U.S. farmers are projected to reduce dry pea plantings in 2010. Canadian farmers are expected to plant 3.62 million acres, a 4 percent reduction, while U.S. farmers are expected to plant 840,000 acres, a 3 percent reduction. This should provide support for field pea prices, but the interaction of growing-season weather and export demand ultimately will set the price direction.


NDSU Agriculture Communication

Source:Frayne Olson, (701) 231-7377, frayne.olson@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
ND State Fair
4-H State Fair Results
Columns
Spotlight on Economics: Spotlight on Economics: China’s Growing Demand for Meat  (2014-10-24)  Recent studies suggest that total average per capita meat consumption in China could grow from about 60 kilograms in 2010 to nearly 100 kg per person per year by 2030.  FULL STORY
BeefTalk: BeefTalk: It’s Time to Buy That New Recliner  (2014-10-23)  This is the time to make good on that long-promised opportunity to do something for the family and ranch help.  FULL STORY
Prairie Fare: Prairie Fare: Take Steps to Prevent Kitchen Fires  (2014-10-23)  Kitchen fires are the most common cause of home fires.  FULL STORY
 
Use of Releases
The news media and others may use these news releases in their entirety. If the articles are edited, the sources and NDSU must be given credit.
 

Powered by Plone, the Open Source Content Management System