Statscan 2013 Acre Estimates: Just As Timid As Spring

Statistics Canada (StatsCan) released its first cut of acreage intentions on April 24. The estimates were similar to those from Agriculture and Agri-Food Canada (AAFC) and the trade earlier in January. The dilemma with the first estimates though is that they can vary greatly when the final acreages are released – sometimes up to two years later. I’ll take a look at peas, lentils, and chickpeas in this report and break out the accuracy of the March intentions as well as ensuring market implications for the next 60 days, (after which I’ll follow up with another article in the July Pulse Market Report).

Peas: At 3.43 million (M) acres, there were no surprises. It was well within the AAFC’s January estimate of 3.3 M and between the levels of 3.2–3.7 M predicted in a poll of analysts by Reuters a week before StatsCan published their findings. There was never enough seed to get to 3.7 M acres. Three of the last five March intentions (2008–2012) have been higher than the final (2010 was only higher by 5,000 acres) while two were lower. On average the March intentions, were higher than the final by 103,600 acres. In the two years they were on the low side, they were missed by 445,000 and 308,000 acres, respectively. There is no focus on lateness of this year’s seeding or whether or not farmers will maintain their intentions should May bring rainfall equal to 2010 and 2012. The market has been inching higher over the past month and container exporters are consistently higher than bulk shipments (vessels). Bids of $9/bushel (bu) or higher are available throughout Western Canada if you shop around. In the United States (U.S.) last week, yellow pea bids eclipsed CA$11/bu for the second time this year. They have been over $10/bu for yellow peas since before Christmas. At the beginning of April, three of the four top pulse-producing states in India were indicating moisture deficiencies. While the monsoon season (June– September) will determine final pulse output, importers took note of the anomaly earlier than Canadian exporters, as they began to prepare for Ramadan demand. Post-harvest results for chickpeas were not as optimistic as government estimates – they never are. Ramadan begins this year on July 9, making the next two weeks critical to getting supplies across the water and onto merchant shelves.

For the third week in April, 1.4 M tonnes have been exported. To attain the AAFC’s goal of 2.2 M exported by July 31, close to 60,000 tonnes need to be shipped over the remaining 14 weeks in this crop year. While the India Meteorology Department (IMD) estimated an average monsoon last week, weather scares here, in the U.S., or in India may be required if the export level is to be attained. Problems with the United Kingdom’s (U.K.) planting season will be offset with better growing conditions in Europe.

If you’re holding yellow peas, your upside will be limited to $10/bu, as that is the trigger point for many farmers. The downside is new crop price, which is now at $8.25/ bu. Those holding out for higher prices need to be aware that when old and new crop prices converge, they usually do it in one day instead of over a period of time. You may wake up one morning and wonder where the old crop bid went. For green pea holders, if $17.50/bu delivered won’t pry product out of your bins, I doubt $18-$19/bu will start the augers either (there have been small premium lots trade at these levels). You are on your own, as the spread between new and old crop is now $4.50/bu. That looks better in your pocket than left on the table. However, a nasty spring could reduce acres yet again and the genie might give you another three wishes. If you have not succumbed to these high prices yet, it is doubtful you need the cash.

Lentils: The 2.06 M acre estimate was within trade estimates of 2-2.3 M, and was consistent with the AAFC’s 2.05 M from January. Given that this survey was done during the last week of March and the first three days of April, both red and green cash lentil prices have since moved substantially higher and farmers will add additional acres to their rotation providing the weather cooperates in May.

Four of the last five years of March seeding intentions have been underestimated compared to the final, by an average of 293,600 acres. That would put lentils acres closer to 2.3 M this spring. However, given the recent run on reds and greens, I expect that number to be closer to 2.5-2.7 M. The largest miss occurred in the 2010 estimate, in which the final lentil planting number was 705,000 acres higher than the March estimate. I disagree with the notion that farmers’ rotations are firmly entrenched at the end of the prior harvest. Lentil acreage increased in 2010 during a period of rapid price decreases and this is the reason for the upper range of my actual lentil acres for this spring. Of course, weather and seeding conditions may mean this is all a moot point.

Source : saskpulse