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Situation report–April 2007

  • Statistics Canada’s survey of 16,800 farmers indicated that there could be a record area of canola seeded on the Canadian prairies and less spring wheat and flaxseed. Durum wheat, oats, barley and pea plantings are expected to rise.  Pea areas are expected to be possible records as strong export demand has provided farmers with high prices.

  • In Ontario and Quebec, grain corn area is expected to be near-record with slightly less area devoted to soybeans.   Corn area is being pushed up because of steady demand from the livestock industry and increasing demand from the ethanol industry.

  • Canadian National conductor and rail workers continued to strike and the labor dispute could not be resolved.  Grain movement in both western and eastern Canada and especially containerized traffic was disrupted. On April 17th Parliament approved the back-to-work legislation.

  • Markets initially fell at the end of March with the release of the US Department of Agriculture’s seeding intentions report forecasting record US corn area at the expense of cotton, soybeans, spring wheat and oat areas. 

  • During April, weather significantly affected US prices. Wheat futures’ prices rallied much higher April 9th after cold weekend weather was reported to have damaged winter wheat crops in several states. Toward month-end, wheat futures’ prices surged higher on concerns of tightening world supplies including confirmed damage to both the US hard red and soft red winter wheat crops.

  • Further, cool and wet weather delayed corn planting in the United States. Chicago corn futures’ prices were volatile during the month but rose late in April when the US Department of Agriculture confirmed that the corn planting pace was behind schedule. By contrast, soybean prices declined on ideas that farmers might plant more soybeans when the optimal time passes for seeding corn to obtain optimal yields.

  • In Canada, logistical problems resulted in fewer grain companies sending canola to export positions and a lack of export pricing.  There were ideas that Canadian canola prices were too high when Ukraine sold canola to Pakistan at lower prices in early April. However, farmers were discouraged from selling at what they considered to be low prices. Prices rallied for a short time in mid-month on limited export coverage and the light producer selling. Then, a strong Canadian dollar pressured prices down while a mid-month Saskatchewan Agriculture and Food report showing lower-than-anticipated 2007 canola area limited losses. Overall, prices were more or less stable over the month.