Canadian Crops in serious need of a good drink..

By Peter McMeekin

The area planted to wheat in Canada this year has risen to its highest level since 2001, according to the latest Statistics Canada Field Crop Survey, but growing conditions are varied, and soil moisture deficits are growing in many regions. The nation's farmers also increased canola, barley, corn and soybeans plantings, but fewer hectares were allocated to oats, lentils and dry peas.

The seeding of Canada’s principal field crops was largely completed by the beginning of June, with the total area forecast at 31.593 million hectares, around 0.7 per cent higher than the 31.376 million hectares planted in 2022. Statistics Canada expects 96.7 per cent of the planted area to be harvested and is anticipating total field crop production will come in at 95.741 million metric tonne, slightly lower than the 96.06MMT reaped in 2022.

The higher wheat area was attributed to favourable global prices leading up to the planting period and expectations of strong export demand in the 2023/24 season. The total wheat area is now expected to be 10.91 million hectares, 6.2 per cent higher than last year and 4.4 per cent above the early spring area estimate.

The area expansion was led by spring wheat which posted a 7 per cent annual increase to 7.91 million hectares, followed by durum wheat which increased 0.5 per cent to 2.43 million hectares. Winter wheat, mainly grown in the eastern provinces, increased 20 per cent year-on-year to 570,000 hectares in 2023. Across the Prairie provinces, farmers in Saskatchewan reported planting 6.9 per cent more wheat, in Alberta, the area reported was 4.4 per cent higher, and in Manitoba, the wheat-seeded area rose 7.2 per cent.

Wheat output is currently projected to rise 5.7 per cent from the 33.82MMT produced in 2022/23 to 35.75MMT this season, assuming trend yields. Adding carry-in stocks of 3.98MMT and imports of 0.13MT brings total domestic supply to 39.86MMT. Statistics Canada has pegged domestic demand 1.4 per cent higher at 9.31MMT and exports 1.2 per cent higher at 24.75MMT resulting in an increased wheat carry-out at season end of 5.8MMT.

While the latest Statistics Canada report pegged this season’s barley area almost 0.6 per cent higher year-on-year at 2.87 million hectares, its latest number is 4.4 per cent lower than grower planting intentions reported in April and 4 per cent lower than the average of the previous five years. Approximately 97 per cent of Canada’s barley is grown on the Prairies, with Alberta the biggest at 54 per cent of the total area, followed by Saskatchewan at 37 per cent and Manitoba with 5 per cent.

Assuming an average abandonment rate of 0.9 per cent of the planted area and a near trend yield of 3.66MT/ha, Canadian barley production in 2023/24 is expected to be 4.5 per cent lower than last season at 9.54MMT. With domestic demand 1 per cent higher at 6.17MMT and exports projected to decrease from 3.72MMT in 2022/23 to 3.33MT this season, the estimated barley carry-out comes in slightly higher year-on-year at 0.8MMT.

Canadian farmers have largely stuck to their canola rotation plans, with Statistics Canada’s June area penned at 8.74 million hectares, marginally lower than the early season area estimate of 8.8 million hectares. This is, however, almost one per cent higher than the area planted last season. Farmers in Saskatchewan reported planting 4.9 million hectares, up 8.8 per cent from 2022. In Alberta, reported plantings were down 2.4 per cent to 2.5 million hectares year-on-year, and the seeded area in Manitoba decreased 4.7 per cent to 1.2 million hectares.

Canola production is currently forecast at 18.4MMT, up from 18.17MMT in 2022/23. Total canola supply in 2023/24 is forecast to increase marginally as the rise in output offsets the tighter carry-in balance. Statistics Canada forecasts stable canola demand in 2023/24, with the domestic crush and export projections at 9.5MMT and 8.8MMT, respectively, on the back of strong global call for oilseeds, vegetable oils and protein meals. With significant investment underway to increase Canadian crush capacity, domestic demand is expected to increase at the expense of exports, but any new facilities are not expected to have a material impact until the 2024/25 season.

The Canadian spring and summer crops may be in the ground, but they are in serious trouble if widespread soaking rains fail to eventuate before the end of July. A chilly and arid March and April were followed by an exceptionally hot May in many regions. Parts of the Prairies are experiencing their direst conditions this century. Soil moisture reserves have been seriously depleted across significant proportions of both Alberta and Manitoba and almost the entire province of Saskatchewan since the beginning of spring. Farmers are desperate, but the forecast does not provide the desired comfort, remaining dry and warm for at least the next two weeks.

Assuming the forecast proves correct, it would put June and July precipitation in Saskatchewan, which accounts for 40 per cent of the nation’s spring wheat production and 55 per cent of Canada’s canola output, at less than 60 per cent of the long-term average. Topsoil moisture conditions were reported at 21 per cent adequate, 55 per cent short, and 24 per cent very short. The province’s moisture deficits are already rivalling those of 2021, when final wheat and canola yields were 65 per cent and 56 per cent of the five-year average, respectively.

According to the latest Canadian Drought Monitor report, around 76 per cent of the nation’s farmland is either abnormally dry or in moderate drought. Drought conditions have continued to expand and increase in severity across the Prairies this summer, with temperatures three to five degrees Celsius above average on the eastern half while the western half was one to two degrees Celsius above average.

With crops across large swathes of the Prairies hanging on by a thread and yields already on a steep downward trend, all eyes are focused skyward, praying that the dry pattern will change in time to salvage this season’s crops. While the issue has been building all spring, the global trade has been more focused on production and geopolitical issues elsewhere. However, the potential impact is now firmly in the spotlight, with the situation already supportive of global wheat and canola values, and this will only increase if essential rains fail to materialise this month.

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