Statistics Canada Acreage Update Leans Neutral to Positive
Statistics Canada released revised acreage estimates last week. Durum and lentil acreage were up noticeably from the March forecast. Canola acreage was revised slightly higher and spring wheat area was cut. Overall, the report leaned neutral to positive for major commodities despite the large increases for durum and lentils.
Spring wheat acreage cut, canola increased slightly
Spring wheat area was estimated at 17.9 million acres, which was a cut from the March forecast at 18.8 million acres and is down from last year’s 18.8 million acres. The cut from the March forecast was in line with historical revisions, which usually are to the downside. The lower acreage is a positive for the spring wheat balance sheet, which is now pointing to a year-over-year decline in ending stocks.
Canola acreage was estimated at 20.8 million acres, which was up marginally from 20.6 million acres issued previously but was down from last year’s 21 million. The adjustment was smaller than the historical norm. The modest increase was not large enough to significantly alter the current outlook for the balance sheet, which is another year of tightening stocks.
Durum and lentils have substantial increase, but viewpoints are not bearish
Durum acres are at 5.7 million, which is up from the March forecast at 5.2 million acres and up significantly from last year’s 4.9 million acres. But despite the big uptick in planted area, the supply outlook is not bearish for Canada. Beginning stocks are set to be substantially tighter for 2020, which essentially offsets the penciled-in production increase. Assuming another year of solid exports, ending stocks are forecast to remain below the 1-million-tonne mark, keeping cash prices supported overall for the 2020/21 crop year.
But this week USDA also raised U.S. durum planted area to 1.5 million acres and issued a 2019/20 ending stocks total that was larger than expectations. This will compete with Canadian durum and does keep the top end of the price outlook under pressure.
Lentil acreage came in at 4.2 million acres, which is up significantly from last year’s 3.8 million and from the March forecast at 3.7 million. But, similar to durum, despite the increase in acres from the March outlook, the balance sheet can manage it. The ending stocks outlook for 2019/20 is historically tight, so beginning stocks for 2020/21 are tight. That keeps pressure on total supplies, which are forecast to be down marginally year over year even with the larger planted area total.
FBN's take on what this means for the farmer
The price outlook for spring wheat improved with Statistics Canada’s June acreage update. While the supply outlook is not as dire as before, we still need a production issue to present itself before we get a big jump in futures. The canola balance sheet was hardly changed from the previous outlook. And, despite higher acreage for durum and lentils, FBN retains an overall positive price viewpoint for those commodities. Demand remains solid for both, and supplies heading into 2020 are tight.
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