Situation report — April 2011

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Canadian seeding intentions

Statistics Canada surveyed 12,600 farmers for the area they intended to seed this spring. Data collection for the March Seeding Intentions Survey was carried out from March 24 to March 31, 2011. In the Prairies, farmers planned to plant a record area of canola and more durum wheat, barley and oats compared to 2010. Quebec and Ontario farmers anticipated seeding the largest area of corn for grain since 2007.

Canadian farmers may seed a record 19.2 million acres of canola in 2011. This is an increase of 14.3% from the previous record set in 2010 and would be the fifth consecutive annual increase in canola area at the national level. In Saskatchewan, canola area could rise by 25.6% to a record 9.8 million acres. Farmers in Alberta expected to plant a record 5.9 million acres, an increase of 8.1% from the previous record set in 2010.

All wheat acres were expected to reach 24.7 million acres in 2011. The largest increase in acres came from durum wheat with a 60.3% rise from 2010 seeded acres. Producers planned to sow 5.1 million acres to durum wheat this year. Spring wheat acres could total almost 18.0 million acres while winter wheat remaining was estimated at 1.7 million acres.

Producers expected to plant 3.8 million acres of soybeans, an increase of 2.5% from 2010. Soybean acres could be down 2.9% to 2.4 million acres in Ontario. Quebec could also see a drop in acres to 630,000 acres. A significant increase in soybean area was planned in Manitoba as producers could plant 690,000 acres. If realized, Manitoba could surpass Quebec as the second largest producer of soybeans in Canada.

Farmers in Eastern Canada planned to plant the largest area of corn for grain since 2007 in response to high prices. Ontario corn for grain seeded area should rise to 2.0 million acres, an increase of 6.7% over 2007. The record area was set in 2007 at 2.1 million acres. In Quebec, the area seeded to corn for grain was reported to rise 8.1% to 988,400 acres. The record area was set in 2002, and repeated in 2007, at 1.1 million acres.

Special crop area was expected to decline as higher prices encouraged producers to return to more traditional crops. Area planted to dry peas was estimated at 2.7 million acres. The Prairie Provinces all show a reduction in acres, with Saskatchewan leading the way with a 24.2% decrease. Saskatchewan producers planned to only plant 2.7 million acres of lentils, a drop of 19.2% from 2010. Producers in non-traditional lentil growing areas were expected to move away from lentils in favour of canola and wheat. Lower prices for mustard seed, chickpeas and sunflower seed have encouraged farmers to replace these crops in their rotations with other, less risky grains.

World supply and demand

The United States Department of Agriculture (USDA) released updated world agricultural supply and demand estimates on April 8.

Global wheat supplies for the 2010/2011 marketing year were nearly unchanged as higher beginning stocks were mostly offset by lower world production estimates. Production was lowered by 1.3 million metric tonnes for Egypt as unusual, early season heat affected pollination and reduced grain size. Global wheat trade was estimated to be higher with imports raised for Turkey, Indonesia, Morocco, Yemen, Egypt and Peru. Meanwhile, global exports were raised 1.1 million metric tonnes with increased exports for Australia, EU-27 and Brazil.

World coarse grain supplies were projected to be 6.3 million metric tonnes higher in April because of an increase in beginning stocks of 1.8 million metric tonnes and a 4.5 million metric tonne rise in production. Higher corn and barley beginning stocks in Iran accounted for a large portion of the larger carry-in while nearly half of the adjustment to production was a result of upward revisions to sorghum production in a number of Sub-Saharan African countries. Global corn production was estimated to be 1.2 million metric tonnes higher with Brazil, Uganda and Paraguay accounting for most of the increase. Imports and exports were both higher this month as a short-term decline in prices induced buying and increased production in South America added supplies to the market. Global corn consumption rose 3.1 million metric tonnes with increased feeding for China, Brazil and Thailand, and higher food, seed and industrial use for China and several African countries. Ending stocks were lowered 0.7 million metric tonnes.

Global 2010/2011 oilseed production was estimated at 447.0 million metric tonnes as higher soybean, sunflower seed and rapeseed production more than offset lower cottonseed production. Brazilian soybean production was projected at a record 72.0 million metric tonnes as ample moisture and favourable late-season weather in the southern states improved yield prospects. Rapeseed production was raised by 0.2 million metric tonnes due to increased output in Russia. Increased sunflower seed production in Argentina and Turkey led to higher global sunflower seed estimates. World oilseed supplies and ending stocks were raised while crush was reduced.

EU rejects lentils for glyphosate residue

On February 24, the European Union (EU) rejected a shipment of organic lentils from Turkey for exceeding its 0.1 parts per million tolerance for glyphosate residue.

Pulse Canada and the United States Dry Pea and Lentil Council were working together with their European counterparts to develop a solution. Currently, the EU allows glyphosate residue in lentils at 0.1 parts per million, compared to dry peas at 10 parts per million. Canada's tolerance level for lentils is 4 parts per million while the United States has a tolerance of 5 parts per million. The two associations were also working with Monsanto to submit an application to the EU to change its maximum residue limit for glyphosate in lentils to be more in line with those of other crops and jurisdictions.

Viterra to operate grain terminal at Port of Montreal

Viterra, Inc and the Montreal Port Authority (MPA) signed an agreement that will allow Viterra to lease and operate the MPA Grain Terminal. The grain terminal is a Canadian Grain Commission licensed transfer elevator with a storage capacity of 262,000 metric tonnes. It operates year round and is located in the deepest inland seaport in North America. It has direct access to both the Canadian National and Canadian Pacific Railways while providing direct shipping routes to various destinations in Canada, the United States and Europe.

Viterra will assume full operation of the terminal on July 1, 2011.

Spring flooding on the Prairies

As of April 27, spring runoff was well advanced across most parts of southern Saskatchewan with flows having reached their peaks and were receding across much of the area. There were a few exceptions, including the Missouri Watershed south of Cypress Hills, where runoff is increasing, the Qu'Appelle lakes, Lenore Lake and the upper parts of the Assiniboine and Red Deer watersheds, where runoff is ongoing.

Manitoba continued to be under numerous flood warnings and watches as officials predicted the crest of both the Assiniboine and Red Rivers would occur in Winnipeg at the end of April. As of April 28, there were 1,981 people evacuated from their homes, largely because of loss of safe road access. There were 81 provincial roads impacted by flood waters, with 50 closed or limited to local access only. Approximately 600 municipal roads were closed. A total of 32 municipalities had declared a state of local emergency. The 2011 flood was affecting a larger geographical area than the 2009 flood, the province's second largest flood in 150 years.

Flood warnings were still in place for the Souris River from Melita and all downstream reaches; the Qu'Appelle River in the St. Lazare area; the Assinboine River downstream of Shellmouth Bridge to Portage la Prairie; Pipestone Creek, all reaches; Oak Lake and Plum Lakes; and Plum Creek to the Souris River including the town of Souris. Flood watches had been issued for the Saskatchewan River near Ralls Island and the Carrot River, all reaches in Manitoba.

The Red River was closely following the lower range of the forecast peak, below 2009 levels. It crested in Emerson on April 25 at 790.29 feet, approximately 0.5 feet below 2009 levels. Water levels at James Avenue in Winnipeg were at 18.36 feet on April 26. Without flood protection infrastructure such as the Red River Floodway, the Shellmouth Reservoir and the Portage Diversion Channel, officials estimated that the Red River at James Avenue in Winnipeg would have been 28.3 feet, almost 10 feet higher than current water levels.

Water levels on the Shellmouth Reservoir, along the Assiniboine River, measured 1,406.6 feet. The reservoir was forecasted to receive near record volumes of water from upstream waterways this spring. Record flows would be equivalent to twice the volume of the reservoir. Officials projected that it would receive over 750,000 acre feet of water this spring (over 370,000 Olympic swimming pools).

Weather impacts world wheat production

Weather setbacks have affected world wheat production as growers try to replenish stocks after a year of poor quality. Crop concerns in the six major wheat growing regions of the world have increased uncertainty in the futures markets and pushed prices higher.

Winter wheat crops in the top three European Union producers, France, Germany and the United Kingdom, faced increased danger of damage from a long spell of dry weather. The plants were being stressed at a critical time in development after winter dormancy. The dry conditions were limiting the uptake of nitrogen and were causing crops to mature earlier. Damage was not yet seen as irreversible but substantial rainfall was needed soon.

Dry weather throughout the key wheat-growing areas of the US Plains continued to stress the American hard red winter wheat crop. As of April 25, only 35% of the US winter wheat crop was rated as in good to excellent condition while 40% of the crop was in poor to very poor condition. Texas, Kansas and Oklahoma showed large portions of the winter wheat crop in the bottom two rating categories. Ongoing forecasts for above-normal temperatures and limited rainfall added to concerns of severe damage and yield loss.

The US soft red winter wheat crop appeared to be fairing better as the crop benefited from timely rains. However, wet conditions in some areas have created disease issues.

The Northern Plains and Western Canada struggled to begin spring wheat plantings under cool, wet conditions. As of April 25, only 6% of acres had been planted in the six main spring wheat growing states. In contrast, 36% of the crop had already been planted one year ago and the five-year average was 28%. In Western Canada, spring seeding had yet to begin. Cold temperatures, slow snow melt, and overland flooding had kept producers out of the field. Historically, 4% of the spring wheat planting would be completed by the end of April and in 2010, producers had planted 12% of the intended acres by this time.

The North China Plain remained dry, stressing winter wheat crops there. Limited precipitation was expected in the short term. India and Pakistan were expected to produce a large wheat crop this year; however, cool temperatures have delayed harvest in India. Conditions in Argentina and Australia were reported as good for wheat planting to start in May. With harvest not until the October to December period, weather could still have an impact on production potential.

Black Sea wheat production and exports were expected to sharply rebound after last year's severe drought. Estimates have been revised lower recently as less than normal rainfall was received in many areas. A shortage of farm finance, limited use of advanced technologies and crop inputs and slow economic recovery will also have an impact on production.


The Canadian Wheat Board (CWB) released its April 2011 Pool Return Outlook (PRO) for the 2011/2012 crop year on April 28. Wheat values ranged from unchanged to up $16 per metric tonne, depending on class, grade and protein level. Durum wheat increased between $4 and $11 per metric tonne. Malting barley remained unchanged while Pool A feed barley was up $16 per tonne.

The April 2011 PRO for the 2010/2011 crop year was released at the same time. Wheat values ranged from unchanged to down $1 to $33 per tonne, with the exception of No. 1 Canadian Western Red Spring 14.5. Durum wheat decreased $2 per tonne with the exception of Nos. 4 and 5 Canada Western Amber Durum. Mart barley was down $1 per tonne while Pool B feed barley was lowered by $4 per tonne.

US corn futures started April at an all-time closing high as a lower-than-expected inventory forecast from the USDA fuelled supply fears. The government had projected March 1 inventories to be down 15% from one year ago and 2.7% below trade expectations. Demand remained strong in the face of limited stockpiles ahead of harvest. Prices would need to move higher to curb demand or stocks would tighten even further. At mid-month, old crop contracts slid to a 2-week low as pressure from other commodities and worries about the global economy and demand spilled over into the market, before rebounding on weather concerns. New-crop contracts, however, remained strong as traders added a risk premium into the market. Cool, wet weather conditions in the Midwest had delayed spring plantings. Farmers need favourable conditions to sow and harvest a large crop in order to rebuild low inventories. If the crop is planted too late, yields will be reduced. Producers may also switch acres from corn to soybeans if seeding is delayed too long.

Weather concerns also supported US wheat futures throughout April. Hot, dry weather through the US Plains continued to stress winter wheat production while wetness delayed plantings of spring wheat in North and South Dakota. Kansas City Board of Trade (KCBT) wheat futures, a hard red winter wheat contract, were supported by rumours that it may be too late for rain to revitalize the winter wheat crop. The potential for increased wheat feeding underpinned Chicago Board of Trade (CBOT) wheat futures' prices. Soft red winter wheat contracts are traded on the CBOT. The variety has lower protein content, making it lower priced, and is typically used in cakes, biscuits and livestock feeds. Slowing export demand and talk of Russia returning to the world wheat market to export supplies sooner than expected pressured the market and limited some of the gains from potential production problems in North America.

Increased competition from South America as harvest progressed weighed on US soybean futures' prices as demand slowed for US product. Demand from China also slowed throughout April amid negative Chinese soy crush margins. Mid-month, China announced that they will likely be cancelling some prior purchases on beliefs it over-booked soybeans earlier in the marketing year, leaving port inventories high and stocks at crushing plants comfortable. The potential for acres switching from corn to soybeans this spring as wet conditions continued also weighed on prices. The soybean futures' market found some support from outside markets, a weak US dollar and larger than expected export sales.

For most of the month, Winnipeg canola futures followed the CBOT soy complex down. Also weighing on nearby futures' contracts were farmer deliveries into the cash pipeline, a strong Canadian dollar, increased elevator company hedge selling and slow commercial demand. The advancing soybean harvest in Brazil and Argentina increased world oilseed supply, adding further downward pressure to the markets. New crop contracts found support in April snowstorms and continued cold, wet weather. Flooding in the Prairie Provinces and the delayed start to spring seeding operations underpinned the market.