Higher canola acres an 2014/15: FarmLink Marketing Solutions

FarmLink Marketing Solutions, a grain marketing company in Winnipeg, expects Canadian canola acreage to increase in 2014/15 (Aug/Jul), a news release from the company said Thursday.

They estimated that canola acreage in Canada would increase to 22.05 million acres, up from 19.74 in 2013/14 (according to Statistics Canada) and the five-year average of 18.85 million.

FarmLink also released estimates for all of the other major crops in Canada. They based their estimates on their analysis of supply and demand for 2013/14, price projections for 2014/15, the market signals and production economics western Canadian farmers are facing.

All-wheat area was estimated at 24.30 million acres for 2014/15, down from 25.97 in 2013/14. Winter wheat area was pegged at 2.00 million, spring wheat at 17.50 million and durum at 4.8 million acres.

FarmLink also estimated that 2014/15 soybean, sunflowers and flax area would increase from 2013/14. They expect corn, rye, oats and barley acres to decrease.

The release added that there are a number of trends at play heading into 2014/15, including improving genetics for soybeans and corn which will allow those crops to expand into new areas. Though, the price will have to be attractive enough to encourage growers to plant the crops.

Another trend is the spread of higher-yielding mid-grade wheat and unregistered varieties, the release added. Returns from soft white, CPS and winter wheat for 2014 are near the top of the range of options, and the growth is stealing acres from barley and CWRS.

But, there are still things to watch out for which could change the initial estimates.

“First is this year’s carryout. In several sectors, there is the risk of ballooning 2013/14 ending stocks, to the point that full bins would reduce farmers’ planting intentions,” said Brenda Tjaden Lepp, chief analyst with FarmLink Marketing Solutions.  “Secondly, is where corn bottoms and stabilizes, because this could weigh on cereal prices harder and longer, hurting projected returns for 2014/15.”

“Both influences seem to point to more of a shift out of cereals into canola, but any market that were to hold up in the face of depressed cereal markets would likely see 2014 acres come in above current projections.”

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