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eNews from Tuesday, March 5, 2013

Canola Loses Ground to Wheat

The Brandon Sun -- March 5, 2013 -- Buoyed by a strong year in the agricultural sector -- where prices for many crops continue to sit at or near all-time highs -- many local farmers are eager to get back in the fields this spring.

Near Strathclair, Parrish and Heimbecker customer service manager Wendy McDonald said there has been a trend toward Glenn, Carberry and Utmost wheat varieties, while Liberty Link and Roundup Ready appear to be the choice for canola as farmers prepare for spring seeding.

Based on sales, McDonald expects similar-sized wheat and canola crops to be seeded in the area this year.

"Most of the farmers in this area are in a fairly consistent rotation, so they can't change their acres a whole lot from year to year," said McDonald, who is also a certified crop advisor.

McDonald said, like many areas, they've seen a drop in the amount of flax and barley acres seeded with canola and wheat picking up the slack. There was also an uptick in winter wheat this year, but she said how it took is questionable.

"Not a lot of the winter wheat that was seeded made the critical stages -- that it have three leaves before the snow hits," McDonald said. "There was some that didn't germinate and some that was on the small side so it will be determined in the spring if that winter wheat will make it or not, or it's got to be ripped up and seeded to something different."

High winds during last harvest might result in more volunteer plants, particularity in canola, McDonald explained. While the volunteer canola can be easily sprayed out of wheat and barley -- where it would compete with this spring's seed -- McDonald said it may not be able to be sprayed out of some canola varieties and will grow as a weed.

Canola had been the golden-haired child for Prairie farmers for many years with typically better profit margins than wheat.

Consequently, farmers have planted ever-increasing acreages of the yellow-flowered crop.

But with historically high wheat prices and a disappointing yield for canola last year, a slight shift in sentiment may be in the works.

The head of a farm-consulting business said some Prairie producers may be backing off from canola and wheat may be stealing their hearts.

"Last summer, I just about fell off my chair when sitting around a table with two clients who said spring wheat was kicking canola out of their rotation," said Brenda Tjaden Lepp, co-founder and chief analyst at FarmLink Marketing Solutions.

"Spring wheat is making them way more money."

Such talk has been part of the conversation since last summer and has contributed to Tjaden Lepp increasing her estimate for wheat this year and decreasing canola acreage for this year's crop estimates -- but not by much.

She noted a few weeks ago, FarmLink was contemplating making an even bigger decrease in canola acreage in its estimates for 2013, but canola futures prices have strengthened recently relative to wheat futures.

At the Grainworld conference in Winnipeg on Monday, Tjaden Lepp released the industry's first planting estimates for the coming year.

She believes there will be a 7.1 per cent decline in canola acres planted or about 1.5 million acres less than last year and a 300,000-acre increase in total wheat planted, which includes a 3.2 per cent increase in acreage for the most popular variety, red spring wheat.

Tjaden Lepp said she would be surprised if any analyst predicted an increase in canola planting this year.

David Reimann, market analyst for Cargill, said drought and disease took its toll on canola yields last year, but there continues to be aggressive international growth in demand and recent price increases.

"I would say that the recent price rally has likely brought some canola acres back," Reimann said.

In his presentation at the Grainworld conference, Reimann pointed out the very low canola carryover from last year and the fact canola continues to sell at "unbelievable high prices," making the oilseed crop a very good bet for farmers.

But the high prices -- Reimann said there has only been a handful of months in the past 30 years with higher canola prices than today -- may not be sustainable.

Most of the presenters at Grainworld agree there is optimism going into the 2013 planting season with summerfallow likely at about half the five-year average.

A few made the case Prairie grain economics will continue to be driven by increasing demand from China, India and Asia.

For instance, Tjaden Lepp is predicting a 12.2 per cent increase in flax acreage this year from 980,000 acres to 1.1 million acres.

But that comes at a time when exports of Canadian flax to Europe have fallen off dramatically, largely because of increased production in Eastern Europe.

The difference, however, is being made up with exports to China.

She estimates both flax and oats -- the Canadian Prairies are responsible for 60 to 80 per cent of global production -- are expected to increase by double digits this year.

She said Manitoba farmers are planting fewer specialty crops because more popular crops are easier to market. and Winnipeg Free Press

(c) 2013 The Brandon Sun

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