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Canola Acres Affected By Price And Rotation

Industry analysts say rotation issues and prices may crimp federal forecasts for record canola acreage this year.

In its latest supply/demand estimates Agriculture and Agri-Food Canada’s market analysis division forecast seeded Canadian canola area in 2009 at a record 17.235 million acres. That would compare with the previous record set in 2008 of 16.159 million.

However, the early Ag Canada est imates are not based on an actual survey of producers. The first survey-based estimates of new-crop acres will be released by Statistics Canada on April 24.

From an agronomic perspective, Canadian farmers have already increased canola plantings by three million acres from 2006 to 2008, said Brenda Tjaden Lepp of FarmLink Marketing Solutions. She said larger acreage increases were possible in the long term, but thought short-term rotational issues would limit the acres in 2009.

Tjaden Lepp said she was currently working with a canola area estimate for 2009 of 16.3 million acres.

“I don’t think they can push it that hard,” said Tjaden Lepp. If prices were considerably better for canola compared to everything else, she thought producers would find a way to push their rotations to include more canola “but that’s just not the case with prices right now.”

Tjaden Lepp said canola should see strong returns in some areas, but added that other crops such as barley, flax and even oats or wheat could look profitable, depending on the location.

“There haven’t been any crops showing a strong price signal,” she said. With no crops showing a clear price signal, she expected farmers would play it safe in 2009 and “grow what you know.”

Tjaden Lepp added that one question that may determine how many canola acres are planted is “when did you book your fertilizer?”

For those producers who can go out and buy their fertilizer now, “then at today’s prices canola looks pretty good,” said Tjaden Lepp.

Mike Jubinville of ProFarmer Canada also pointed to rotational issues as a potential limiter of canola acres. “Growers have really pushed their rotations awfully hard and have maxxed out what they should be doing for canola acres,” he said. Through conversations with producers, Jubinville thought canola acres might actually be down slightly on the year. Looking at the current market Jubinville didn’t think the returns per acre for canola were all that impressive.

He noted that while farmers may not necessarily make more money growing a crop like Hard Red Spring wheat “it’s a far less risky crop to grow and you don’t have to put out the big dollars that you do on canola.” As a result, Jubinville thought producers would go with the “safer bet” this year and not increase canola plantings significantly. He also pointed out that the better varieties of canola seed are normally sold out by this time, which is not the case this year.

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Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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