CNS Canada — The latest acreage report from Statistics Canada failed to surprise most investors in the market, but still could leave canola futures looking overpriced, according to a trader.
“It certainly is a negative number,” said Ken Ball of PI Financial in Winnipeg, referring to the agency’s estimate for canola.
StatsCan’s report on Friday pegged acreage in 2018-19 at 22.7 million acres, up significantly from the March estimate of 21.4 million. Canadian farmers seeded 23 million acres in 2017.
Most participants expected a jump, though, so the number itself wasn’t much of a surprise. Still, it comes in the wake of a sharp drop by U.S. soybeans, which have lost well over US$1.50 since late May.
“It (canola) is certainly higher–priced compared to the other U.S. markets,” he added. “Leaving it vulnerable to the downside.”
Still, others thought canola acreage would be much higher.
“We thought there were more canola acres out there,” said Neil Townsend of FarmLink Marketing Solutions in Winnipeg. The advisory group had pegged acreage at 23.4 million.
StatsCan’s durum forecast also came as a surprise, he added. The agency forecast durum at 6.2 million acres, up from last year’s total of 5.2 million.
“We thought it would be much lower than that,” he said, adding the company’s estimate was closer to 5.5 million.
One of the other crops to see its acreage cut in the report was flax. StatsCan predicted just 885,000 acres would be grown in the coming year, down from over a million acres last year.
“Flax used to be a third of the acreage in Manitoba,” said Bill Craddock, a trader who also farms and owns an aerial spraying operation near Winnipeg.
As for canola, one analyst feels the market could be due for a significant move as early as next week.
“There is something about the Canada Day timeframe,” said Mike Jubinville of ProFarmer Canada in Winnipeg.
“(After it’s over) we tend to either abruptly change direction or accelerate the trend we were previously on,” he said.
— Dave Sims writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.
Table: A recap of Statistics Canada’s acreage report as of June 2018. Pre-report expectations are provided for comparison purposes. Figures are in millions of acres.
|Pre-report||StatsCan,. .||StatsCan,. .||StatsCan,|
|Canola||21.300 – 23.700. .||22.740||21.383||22.997|
|All wheat *||24.000 – 25.700||24.710||25.259||22.391|
|Durum||5.500 – 6.200||6.185||5.777||5.205|
|Barley||6.000 – 6.400||6.499||6.059||5.766|
|Oats||2.900 – 3.300||3.053||3.148||3.200|
|Peas||3.500 – 3.900||3.603||3.868||4.093|
|Lentils||3.750 – 4.000||3.767||4.050||4.405|
|Soybeans. .||6.400 – 6.800||6.320||6.452||7.282|
* – Total wheat includes spring wheat, durum wheat, and winter wheat remaining after winterkill