Recently updated acreage estimates from Statistics Canada came largely within market expectations, with the focus now shifting to growing conditions and the yield potential.
The survey was completed in early June “and may not have captured all of the seeding delays and potential shifts that may have happened in central/northern Alberta and northwestern Saskatchewan because it was too wet,” said analyst Mike Jubinville of MarketsFarm Pro.
Total canola area for 2020-21 was pegged at 20.778 million acres, which was at the higher end of trade estimates but still slightly below the 20.956 million acres seeded the previous year.
Jubinville expected the canola acres could be trimmed a little more, with some of that area going into barley or oats, but didn’t expect it would be enough to shift the market.
“The attention to yield will be more important going forward,” he said adding that any more “nickel and diming” in acreage estimates wouldn’t likely be enough to change the market sentiment too much.
Total wheat area was forecast at 24.971 million acres by Statistics Canada, which was down by about 500,000 tonnes from the previous estimate. Of that total, spring wheat was pegged at 17.926 million acres. That would be down from both the previous estimate and the year-ago level. However, durum was revised higher, at 5.689 million acres.
Lentils were also revised higher from an earlier estimate, with the projected 4.233 million acres up 12 per cent on the year.
“The economics of growing lentils looks more attractive going into this growing season than it has in the last number of years,” said Jubinville.
U.S. acres down
Also this week, updated acreage estimates from the United States Department of Agriculture came as a bullish surprise, with area for both soybeans and corn coming in below expectations as of June 30.
The USDA pegged U.S. corn area at 92.0 million acres, which was about five million acres below the previous estimate. While that would still be up from the 89.7 million seeded in 2019, average trade estimates had been for a more modest adjustment.
“The acreage number was a big surprise,” said a Chicago-based trader.
“The funds are short quite a bit (in corn) so they’re getting squeezed,” he added on the resulting rally in the Chicago Board of Trade corn futures.
The separate quarterly stocks report was slightly bearish for corn, showing larger-than-expected quarterly stocks of 5.224 billion bushels.
Those large supplies and relatively favourable Midwestern weather conditions could cap additional rallies, according to Terry Reilly of Futures International in Chicago. However, he added that the bullish acres were the focus of the trade for now.
“The trade was blindsided here,” said Reilly.
He expected to see the open interest in corn drop substantially as funds had been holding large short positions that they were now buying back.
The USDA estimated soybean area in the U.S. at 83.8 million acres, which was only up by 300,000 from the March estimate and well below average pre-report guesses closer to 85.0 million. U.S. farmers seeded 76.1 million acres of soybeans in 2019.
All-wheat area in the country, at an estimated 44.3 million acres, was at the lower end of trade guesses. It marks the smallest wheat crop in the country since records were first compiled in 1919.
Total area to all crops was down by 7.2 million acres from the March report, as lower prices had producers taking a step back and reassessing “planting to the roads” as they have in the past, said Reilly.
The following table is a recap of Statistics Canada’s acreage report as of June 11, 2020. Pre-report expectations are provided for comparison purposes. Figures are in million acres.