Statistics Canada surprised grain market analysts with higher-than-expected acreage estimates for wheat, durum, lentils and peas, and a much lower-than-expected number for canola, on Friday.
Coming off a dry year in much of Western Canada in 2017, you can’t help but notice the crops that came in above expectations are crops we generally think of as being more drought-tolerant, and vice versa with canola.
But as Dwight Nichol of DLN AgVentures points out in the interview below, these drought-tolerant crops — lentils, peas, durum, spring wheat — are already under pressure from heavy supplies, with major concerns about demand (for example, India and Italy being off the market for pulses and durum.)
“It all falls under the theme of environment versus price. I think this shows a real concern over drought conditions going into spring,” he says.
The oversupply situation for these crops will get worse if the acres StatsCan reported become reality, says Nichol: “The only crop it’s positive for is canola. For pretty much every other crop on the balance sheet here, we’re oversupplying markets where they’re already oversupplied and there are already issues.”
Not just Lentils. Could use Peas, Durum, or Spring Wheat with same result. Canola $50-75 more variable cost investment per acre. pic.twitter.com/rHVReSTc3o
— Dwight Nichol (@DLNDwight) April 27, 2018
Did concerns about local conditions trump market signals in prairie farmers’ seeding plans? Have intentions changed since StatsCan surveyed farmers in March, given the late snowfall in some areas?
Here’s Nichol’s analysis, as we discussed farmers’ mindsets heading into seeding on RealAg Radio on Friday afternoon: