StatsCan acreage estimate yields few surprises

(Resource News International) — There were few surprises Monday in Statistics Canada’s first acreage survey for the 2008 season, although forecast seeded area for barley, oats and some specialty crops were considered by market participants to be a bit on the low side.

The agency’s durum estimate was also considered to be a bit lower than expected.

“There was a general increase in planted area in most cases, which will confirm the trend to higher area for a lot of crops,” said Ron Frost, manager of the marketing division of Pike Management Group’s AgProfit Driver in Calgary.

“The general trend of higher acreage was there, but the magnitude of the increases was not quite as high as some had been anticipating,” said Ken Ball, a broker with Union Securities Ltd., in Winnipeg.

The lack of major increases in acreage estimates was believed to be a function of farmers not taking as much area out of summerfallow as had been anticipated.

“The amount of area that will be removed from summerfallow or pasture land from the year-ago level was only about 900,000 to one million acres,” said Mike Jubinville, an analyst with the farmer advisory service ProFarmer Canada in Winnipeg.

Industry participants had been expecting two million to three million acres to be removed from summerfallow in 2008, he said.

Out of StatsCan’s numbers, both Ball and Frost found the most noticeable to be barley, coming in at possibly the lowest level ever.

Barley area in Canada in 2008 was estimated by StatsCan Monday at 9.332 million acres, which compares with the 2007 level of 10.865 million and pre-report expectations that ranged from as low as 7.36 million up to 11.1 million acres.

“With the barley number coming in at so low a level, the whole livestock industry in Canada is probably letting out a collective groan,” Ball said. “They are going to need more area to barley than that.”

Ball attributed the low barley acreage estimate to the fact that barley prices were low during the winter, with values only now starting to show some improvement. The low acreage estimate was also linked to the fact that the issue of who will be in control of marketing that crop in Western Canada has still not been resolved.

While the decision to not grow barley partly reflected the uncertainty regarding the marketing issue, Jubinville said, he felt the economics led farmers to consider other crops.

“In calculating the net return per crop, barley generally pencilled out well, but was consistently at the bottom of the list when compared with other crops,” he said.

The net result of barley area being at its smallest ever is that Canada will not likely be able to export any feed barley, and that supplies for the malting industry are going to become extremely tight. Normally, he said, barley area in Canada generally averages between 11 million to 13 million acres.

Statistics Canada estimated oats area at 4.485 million acres, which was down from the 5.408 million seeded in 2007. The number also compares with pre-report ideas of 4.48 million to 5.1 million acres.

The drop in seeded area to oats was also seen as being a bit larger than what the trade had been anticipating, Frost said. “The industry was expecting a drop in oats, given that new crop values were not as good as they could have been.”

Ball agreed the oats estimate was on the low end of expectations, and will be probably low enough to help tighten up any surplus of oats that will be carried over from the 2007-08 season into 2008-09.

StatsCan estimated 2008 canola area at 14.804 million acres. This was up from the 2007 level of 14.726 million acres and compares with pre-report estimates that ranged from 14.9 million to 15.5 million.

The canola estimate was seen as neutral to mildly friendly overall.

“It’s certainly less than what the trade had been expecting, but it will still be up from last year and will be the largest in Canada’s history,” Jubinville said.

There were ideas that canola area will increase ahead of Statistics Canada’s next acreage survey, scheduled to be released June 24.

“We are still going to see canola area climb above 15 million acres,” said one broker, not wanting his name to be used. Improved soil moisture conditions in the southern regions of the Prairies, because of recent snowfall, should be enough to pull some swing acres to the crop, he said.

The all-wheat estimate of 25.109 million acres was up from the 21.617 million seeded in 2007 and generally fell in line with pre-report projections that ranged from 22.8 million to 27.5 million acres.

Of the all-wheat numbers, Frost said, durum was probably the biggest surprise.

“A number of market participants had actually expected durum area to be in the seven million-acre category, and the fact that it did not even clear six million was the surprise,” he said. Dryness in the southern regions of Alberta and Saskatchewan were linked to the expected jump in durum seeded area.

There was some comfort taken from the fact that durum area did not increase as much as had been anticipated, Ball said.

The jump in the all-wheat area estimate reflected the fact that winter wheat seedings climbed from 1.6 million acres to 2.6 million, Frost said.

The spring wheat area was also a bit higher, but it would not have come as a surprise had it been unchanged, Frost said. Disease problems in Manitoba probably had some role in holding back that seeded area.

With the initial seeded area numbers now out, weather and dryness will probably play a role in what kinds of crops actually go into the ground, Jubinville said.

Statistics Canada 2008 preliminary estimates of principal field crop areas, as of March 31, 2008, in thousands of acres.