First Thoughts About 2002 Acreage

[charliep]

Any first thoughts about what will go in the ground next spring?

A couple of comments on things I will be watching.

1) Weather/soil moisture - Unless the prairies get rain/reasonable over the next six months, small seeded crop acreage like canola has to remain the same/decrease. I will be interested in comments on what your strategy will be in a dry spring.

2) Fertilizer costs/other inputs.

3) Summerfallow acreage?

4) Cereals planted for summer pasture/winter feed needs?? The hay market continues to grow as does movement of cattle into non traditional feeding areas.

5) Impact of feed grain shortage/tight carryovers on barley acreage? Canada needs to grow a 13 MMT crop next year to satisfy our customers needs (domestic feed industry - 10 to 10.5 MMT, malt barley needs - 2 to 2.5 MMT, seed - 400,000 t). This means seeding a 14 to 15 mln acre crop, up 10 to 15 % from the current based on continued dry conditions and therefore below average yields. What happens if we put in bigger acres and weather cooperates to produce monster yields?

6) Canola is a similar story on the demand side. Customer needs are as follows:

Domestic crusher with capacity 4 MMT plus and recent average crush 2.6 MMT (likely a good target for 2002/03),

Exports - 2.6 MMT minimum based on the following assumptions: Japan 1.8 MMT, Mexico - potential to maintain 600,000 to 800,000 t (opportunity to grow to 1MMT plus), US - 100,000 to 200,000 t, China as much as we want if our price is competitive with other oilseeds.

Seed waste and dockage - 400,000 t plus.

Add the above up and you come up with minimum needs to meet the lowest demand scenario of 6 MMT. Based on today's information/soil moisture conditions, this means a minimum 12 mln acres.

6) Wheat acres????? Durum will be up. Mid quality wheats like prairie spring will be up to satisfy feed demand/provide market alternatives to the CWB. High quality spring wheat market will remain optimistic based on the tight world wheat S&D but unless something happens over the winter will remain a dog in terms of prices. My thoughts are the war for acres this spring will be between spring wheat (CWRS) and canola with top soil moisture being the determining factor.

What are others thoughts about seeded acres this spring? What factors will you be following in your seeding decisions? I realize this is early but we have already had discussion on 2002 pricing opportunities so this analysis needs to go forward.

[charliep]

I re-read/noticed a mistake in the above. Recent domestic canola crush has been about 3 MMT. This is likely a good beginning target for 2002/03.

[crusher]

I will probably maintain my standard rotation which includes 30% canola, 20%peas, 15% barley and 35% wheat. I've had so much yield variability the last couple of years, that I can't seem to predict how my crop is going to turn out until harvest time. Soil moisture in the Edmonton area is okay right now, I don't think it will affect seeding intentions here.

[ianben]

First planting figures just published here in UK show we have (or will) plant record wheat area 2.3m hectares compared with last years weather reduced 1.6m. Barley is the main loser, canola expected to be the same or slighty up, linseed/flax, with reduced subsidies, is expected to almost disappear, 5000ha perhaps.
We have finished our fall seeding all crops now showing in the rows and herbicide and insecticide applied. Slugs have been a problem some fields needing 3/4 applications of pellets.

We have tried to keep our normal rotation but wheat area is slighty up due to changes forced by last years weather.
Looks like we are all in the same boat.

Feed barley prices are very low here at the moment, £58/£63/tonne, feed wheat £72/£76 dont think I have ever seen such a difference.
Our malting contract has had the expected claims three loads over nitrogen -£3/tonne if I was willing to meet this spec premium was £20/tonne not £12 last Oct.
One load moisture 15.2% not 15% on a damp day when we loaded in drizzle -£1.04/tonne.
Does it pay to beat the market?

Regards Ian

[TOM4CWB]

Charlie,

It will be interesting to see when the Oct 2002 feed wheat and barley contracts start trading, what they will offer for next falls prices.

Canola is too much discounted to start contracting, as too much risk for the reward offered.

Barley was the best return on our farm this year, and we will be watching closely what happens when the futures start trading for fall 2002.

Canola users will have to more to buy acres!

CWRS is beyond explanation, will we get a winter spring rally, probably?

[charliep]

Both Oct 2002 barley and feed wheat are on the board at the WCE. Oct 2002 western barley is quoted at $143 this am with an open interest of 10 contracts. No trades Oct. 2002 feed wheat. Is feed barley a buy or sell at this price? Thoughts about Nov 2002 canola futures in the $290 to $295/t range?

[rain]

Wheat and barley are probably a buy for end users. Most old crop offers are over basis and I do not think too many producers will do unders basis right now. We are supposedly looking at record low barley carryout this year. The dry area of Western Canada is not getting any smaller right now.

You can book $7.00 under delivered Calgary region October 2002 delivery $2.96/bushel. With an Avg canola basis of $8.00 under delivered Calgary you are looking at $6.54 delivered.

I think it is to early to be pricing any new crop grain production, I feel the new crop futures being inverted will need to go to carry don't you?