The figure occupied the lower end of trade expectations, but StatCan recently adopted a new methodology of conducting the survey last December and January, two months earlier than in previous reports.

At least one analyst is thinking there will be even more canola acres planted this spring.

“Fertilizer prices dropped considerably between December and April,” Jerry Klassen of Winnipeg-based Resilient Commodity Analysis said. “The trade thinks this canola number is on the low side, maybe by 500,000 (to one million) acres. I think we’re going to see an increase on the next report.”

The July canola contract lost $17.30 per tonne for the week ended Wednesday, to $734.90, while the November canola contract gave up $13/tonne, to $703.30. This is despite funds exiting short positions before the expiry of the May contract.

“I think the managed money is still doing some short-covering here. I think the market has limited resistance because farmers aren’t typically active sellers at this time,” Klassen said.

He also cited increasing commercial demand and the potential for adverse weather in Western Canada as other factors supporting canola prices.

“Once you get into the second week of May, you get a bearish scenario once the weather starts to co-operate and seasonally, once you get past the Victoria Day long weekend, canola has a large bearish tendency,” Klassen said.

“Over the next couple of weeks, you have a firmer tone. But in the longer term, you’re going to get this crop seeded and it’s getting off to a good start. The weather is going to be cool and wet.

“You’re probably going to see record canola yields this year.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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Soybean futures also declined while wheat closed higher, rallying on bargain buying after the benchmark Chicago Board of Trade May wheat contract fell to its lowest level of 2021.

A firmer dollar hung over the markets, in theory making U.S. grains less competitive globally.

CBOT May corn settled down 5-3/4 cents at $5.46-3/4 per bushel (all figures US$). CBOT May soybeans ended down 7-1/2 cents at $13.93 a bushel after dipping to $13.83, the contract’s lowest level since March 2.

CBOT May wheat finished up 3-1/2 cents at $6.16-3/4 a bushel, bouncing after a drop to $6.07-1/4, its lowest since Dec. 22.

Corn and soybean futures were pressured by outlooks for mostly warm and dry conditions in the Midwest as farmers begin spring field work.

“CBOT corn and soybean futures traded lower on forecasts for above-normal temperatures across the Corn Belt during (first-half) April, which could contribute to a timely start to U.S. corn and soybean planting,” Dan Cekander, president of DC Analysis, wrote in a client note.

Analysts expect U.S. growers to increase their plantings of both crops this spring compared to a year ago, in response to strong export and domestic demand that lifted prices to multi-year highs in recent months.

USDA is scheduled to release its annual U.S. planting intentions and quarterly grain stocks reports on March 31.

Commodity funds hold sizable net long positions in CBOT corn and soybean futures, leaving both markets prone to long liquidation ahead of the two crop reports, which have a history of making waves in the futures market.

“Traders are rather cautious ahead of (the USDA report) publication,” French analyst Agritel said in a note.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Colin Packham in Canberra and Sybille de La Hamaide in Paris.

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Ahead of the report, average trade estimates predict 93 million acres of corn, 90 million acres of soybeans and 46 million acres of wheat will be planted in the U.S. this year. In 2020, about 92 million acres of corn, 83.8 million acres of soybeans and 44.3 million acres of wheat were grown.

Scott Capinegro of Barrington Commodities at Barrington, Ill. said the upcoming report has already had an effect.

“Corn and soybean (spreads) have widened back out where they should probably be from the lows of a week-and-a-half ago,” he said. “I think they are anticipating a bullish report. We know the acreage is going to be there for corn and beans.”

Recent wet weather across parts of the U.S. has taken weather premiums out of new-crop corn and soybeans and has lowered wheat prices, Capinegro added. The strengthening U.S. dollar has also created a negative effect on crop prices, while soybeans have received support due to Chinese demand.

Soybeans “still have some support even though China hasn’t been back in the market, but (it) also hasn’t cancelled as many (purchases) as you would think at this time frame,” he said. “That’s because Brazil is still running behind… I guess (China) is sitting on their hands and make sure (it) gets the beans from Brazil first before switching from old crop to new crop.”

Capinegro is also watching the May soybean price, saying it will be “constructive” if it closes above $14.55 per bushel and could lead to $15.50 (all figures US$). However, Capinegro is wary of a sharp decline to $13.75.

As for corn, he expects a 20-cent decline in the December contract if wet weather continues and next week’s acreage numbers are promising.

Nevertheless, while corn and soybean prices remain at their highest levels since 2017 and wheat is experiencing choppy trading, two major factors will affect prices in the coming weeks.

“It will still come down to what our acreage and what our spring weather are going to look like. Our two trouble spots right now are in the Dakotas. They’re probably the driest out of all the states,” Capinegro said.

“If we start planting, get some rains, I see pressures on the markets. But then comes the first week of June and the rule of thumb is if you’re short, maybe it’s time to cover because we’re going to be going into our summer weather. We know we can’t afford another bad year of yields here.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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However, while prices are off the highs that drove 2018 seeding intentions, they still could have some room to the upside over the next few months.

After seeding 442,900 acres of chickpeas in 2018, Canadian farmers are forecast to plant only 185,000 acres in 2019, according to estimates from Agriculture and Agri-Food Canada. While down on the year, that would still place the seeded area well above the previous 10-year average of about 150,000 acres.

Prices are well off of their highs of a year ago, which is the major factor behind the projected acreage reduction, but there could still be room for some firmness from a marketing perspective heading into the spring and summer, said Colin Young of Midwest Grain Ltd. at Moose Jaw.

Chickpeas in storage need to be checked to prevent spoilage, but can be kept indefinitely in proper conditions. Young estimated any stocks that needed to be marketed were already sold a long time ago, with producers now content to hold out for better prices.

While current pricing for kabuli chickpeas in the 27-28 cents/lb. area is a far cry from some of the bids seen over the past year, they are up from their 20-cent lows and should pencil in as a viable cropping option, according to Young.

In addition, after the large 2018 crop “there is a lot of good quality seed that’s affordable and available,” he said.

Seed cost and availability will not be a barrier to chickpea production, but lower guaranteed prices from an insurance standpoint could sway some intentions away from the crop.

Last year, farmers were guaranteed 42 cents on any shortfall in production, which won’t be the case in 2019 given the current spot market, said Young.

Lentil prices also look to be on the rise, which will see some more interest there compared to chickpeas, according to Young.

From a marketing standpoint, “at this point, everything is still hinging on the situation in India,” he said.

While India is not traditionally a large importer of Canadian chickpeas, the country can be a competitor on the export market.

India typically will keep the smaller-calibre chickpeas for domestic consumption and export the larger caliber “at significantly discounted prices,” Young said.

If India has a production shortfall, it would be less likely to export cheaply — which supports world prices. India will be harvesting its chickpea crop over the next few months, and “the situation in India is weighing on people’s minds,” according to Young.

India is a large country with many different growing regions, but the general sentiment heading into the harvest is that dry weather will cut into chickpea production, he said.

Tightness of other pulses could also put the country in a position that it would need to import lentils, which would help set the stage for a repeal of the tariffs currently limiting Canadian exports.

“I’m cautiously optimistic that the markets will remain firm, or possibly appreciate.”

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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Saskatchewan farmers intend to seed 2.171 million acres of peas, which would be actually up slightly from the 2.165 million seeded in 2017. Lentil intentions were down, but not by as much as many industry participants had expected. When the survey was conducted in March, Saskatchewan farmers intended to plant 3.591 million acres of lentils, which compares with 3.920 million the previous year.

Chickpeas, meanwhile, should see an increase in the province, with intended area estimated at 279,200 acres, up from 160,000 in 2017.

Based on overall market conditions, actual lentil area may still end up lower than the survey, said Carl Potts, executive director of Saskatchewan Pulse Growers.

Nothing has changed on the marketing front over the past few months, he noted. “We continue to have high import duties for our largest market (India) for both red lentils and yellow peas.”

For what is seeded, Potts expected to see a significant reduction in red lentil acres and an increase in greens, as the green lentil market is not as reliant on India. Depending on what happens with price spreads between green and yellow peas, he said there could also be more shifts in yellow peas than greens.

However, solid demand for yellow peas from domestic fractionation plants and China is making Canada less reliant on India for yellow peas as well.

For chickpeas, intended acres in Saskatchewan would mark the largest acreage base in a decade. While chickpeas are riskier to grow than lentils, Potts said the relative returns were starting to look better for chickpeas in the regions they’re grown.

Potts linked the growing North American demand for hummus as another factor behind the strength in chickpeas, as that demand creates a closer market for the commodity.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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Rains in Argentina over the past weekend helped ease dryness concerns there somewhat and caused soybeans and corn futures to drop on Monday. However, the moisture likely came too late to improve Argentine crop prospects, according to market analysts.

Beyond the South American weather, “over the short term, we may trade two-sided in beans and possibly grind lower when we get into the spring planting season in the United States if we don’t see any problems,” said Terry Reilly of Futures International in Chicago.

Reilly placed support in the May soybean contract at the 100-day moving average, around $10.09-$10.10 per bushel (all figures US$).

Meanwhile, he expected corn to be neutral in the short term, with a bearish outlook on wheat and oats likely limiting any upside potential. Reilly placed May corn in a narrow range between $3.70 and $3.80 per bushel.

Improving moisture conditions in Canada and the northern U.S. pressured Minneapolis wheat and Chicago oats, which should keep corn prices in check, according to Reilly.

The U.S. Department of Agriculture releases its prospective plantings report on March 29, which should provide some nearby direction as traders square positions ahead of the data and then react.

General expectations are for an increase in soybean acres on the year and a decline in corn, with U.S. soybean acres likely to top corn for the first time in decades.

“The price relationship between beans and corn still favours beans,” said Reilly.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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However, adjustments are likely in subsequent reports, while weather over the growing season will become more important in determining actual production.

“There’s nothing in here that’s particularly game-changing,” said Jon Driedger of FarmLink Marketing Solutions, on the acreage estimates.

“Changes in acreage are always important, but yield will make the bigger difference in what the ultimate production will be,” said Mike Jubinville of ProFarmer Canada.

All-wheat (spring, winter, durum) area was forecast at 24.8 million acres, well within pre-report trade guesses and up from the 23.8 million seeded the previous year. Of that total, durum area is forecast to rise to 5.5 million acres, from 4.8 million in 2014.

Canola area was forecast at 19.4 million acres, nearly a million acres below the 20.3 million seeded the previous year, but in line with trade estimates.

“We’ll either need to see the canola number come up, or this market will be really tight next year,” said Driedger.

“At 19.4 million acres, if we even have a slight hiccup in the crop, our carryout will be very tight,” said Wayne Palmer of Agri-Trend Marketing. He expected to see adjustments of more canola and less wheat in upcoming reports.

“Any spark of a weather scare would lead to a rally (in canola),” said Palmer.

Beyond wheat and canola, oats were one surprise that fell outside most pre-report estimates. StatsCan pegged oats area at 3.6 million acres, up from the 2.8 million seeded in 2014.

“That’s too much oats,” said Jubinville.

Driedger also pointed to the oats number as being on the large side, and expected actual area would be revised lower in subsequent reports.

Barley, meanwhile, could be seen as bullish, according to Jubinville. While StatsCan forecasts barley acres to rise to 6.5 million, from 5.9 million in 2014, many pre-report trade estimates had topped seven million.

Pea area was forecast at 3.8 million acres, relatively unchanged from the previous year, while lentils were forecast to be slightly higher on the year at 3.4 million. Most analysts were anticipating even larger area to the two pulse crops, which could show up in subsequent reports.

Summerfallow is forecast to be the lowest ever, with only 2.7 million acres slated to be unseeded according to StatsCan. That compares with 4.6 million unseeded acres in 2014, and the five-year average of 7.2 million.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

Table: A recap of Statistics Canada’s acreage intentions report, in millions of acres, for the period ended March 31. Pre-report expectations provided for comparison purposes.

* — Includes winter wheat remaining.

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