SK Pulse Market Report
Bulls and Bears Opinions
2012/2013 Seeding Intentions: Roll The Dice.
By Larry Weber
“Farming looks mighty easy when your plow is a pencil and you’re a thousand miles from the corn field.”Dwight David Eisenhower (American 34th President) 1890-1969Each year when I begin to contemplate farmers’ seeding intentions, I always remember Eisenhower’s quote above as a reminder of the contrast of the simplicity of writing about something versus the difficulty of actually doing it with cold hard cash on the line. When Agriculture Canada published their first estimates for pulse acres this January and I began to add up all the projected acres, reality set in as to how vile the past two springs have been in parts of Western Canada. Ag Canada is projecting an increase in acres in every crop with the exception of lentils. After two years of seeing 7.5 to 12 million acres sit idle because of flooding and impassable fields, those acres are set to come back into rotations this spring. One only has to look at the current drought maps to realize there is a high probability of this occurring.
Peas are projected to make the biggest comeback this spring with a 27% increase in acres over last year. While new crop bids for both yellow and green peas have been thin, initial estimates are between $7 and $7.50 for both colours. New crop yellows are bid USD$7/bushel (bu) in North Dakota while green peas are bid USD$7.50/bu. With yellow field peas and red spring wheat running at the same levels for fall delivery, look for higher pea acreage and higher fertilizer prices as we head into spring. If the weather patterns don’t change soon, this will be the first time since 2005 that some farmers will contemplate the lack of moisture before seeding. I expect field peas will be seeded on 3.1 to 3.2 million acres versus Ag Canada’s 2.964 million.
Lentil acres are expected to fall 13.5% this year, the second yearly decline after five years of growth. There were a few new crop red lentils bids during Crop Week in the 18¢/pound range. Lairdtype lentils are still bid from 23-25¢ for fall delivery and Eston type lentils are bid 22-24¢. With no incentive to lock in reds at this time, and the probability of carrying over 750,000 tonnes of lentils for three consecutive years, don’t be too surprised if lentils fall below 2 million acres come spring. It is difficult to get too excited dropping more seed in the ground when you are sitting on two or three bins you have not sold from the previous year. If it continues to stay dry into seeding, the dice will roll with crop insurance statistics and return on insurance investment rather than current economics. There have been healthy lentil yields to build averages over the past three years and those averages could come into play, for all the wrong reasons. I’ll get to weather later.
Chickpeas acres are forecast to be 8% higher than last year. However, few new crop bids have surfaced and seeding anything for last year’s prices is not arecipe for success. All things being equal, kabuli type chickpeas may have the best returns per acre given last year’s prices, but the risk will turn some acres away. The largest crop experiment in Saskatchewan’s history is now out of the 10 year average. I have chickpea acresat 150,000-175,000 tonnes this spring.
I am not a meteorologist nor will I profess to be, but I have followed what I consider two of the best agriculture weathermen for the past 10 years – Drew Lerner in Kansas and Elwynn Taylor in Iowa. I now have drought maps going back to 1999/2000 and I don’t want to be a fearmonger, but the 2012 drought maps are starting to look very similar to the 2001/02 maps. The sun has been relatively quiet with regards to sunspots and solar storms since 2002. The last six years have witnessed the least amount of solar activity in more than 100 years, according to NASA research. That is changing this year and solar activity is expected to peak in 2013. La Nina is now expected to stay well entrenched until at least the end of April. Just as the drought shaped up through the winter of 2001 and into the spring of 2002, it is the dry pattern on the prairies that we have witnessed since August that scares me. As you prepare your seeding plans today for April and May, make sure you have a few Plan B’s loaded on your computers, tablets and scribblers. Not only will the markets be volatile because of world economic uncertainly, volatile weather will exacerbate the situation. This year, just as every other year, it looks much easier on paper than it does in the field. However, this year I am more fearful than others.
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Source: Saskatchewan Pulse Growers