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CORN ACREAGE TO SPIKE 10% – AG CANADA

on May 30 | in Tek Talk | by | with No Comments

From Agriculture and Agri-Food Canada’s Outlook for Principal Field Crops

Total domestic use is forecast to remain unchanged as slightly lower feed use is offset by higher industrial use. Imports are forecast to increase sharply to 1.7Mt given the decline in domestic supply which is about 50% higher than the previous five-year average. Exports are forecast to decrease by 74% due to the decline in domestic supply and the much lower quality of the 2014 crop. Carry-out stocks are forecast to decrease slightly to 1.5 Mt, a 6% decline. The Chatham in-store elevator price is forecast to increase above 2013-14 levels as the nearby #2CW basis continues to be well above the previous five-year average. The basis levels began to weaken by mid-April due to the strengthening of the Canadian dollar, lack of end user buying and then good US corn seeding progress into the first half of May.

Ontario’s corn farm stocks are 11% lower than 2014 but are higher than the previous five-year average by 10%. Quebec’s corn farm stocks are 21% lower than in 2014 and are lower than the previous five-year average by 6%. Manitoba farm stocks are 56% lower than in 2014. However, due to the trend for higher area in the past few years Manitoba farm stocks are still higher than its previous five-year average.

Canada has changed its coarse grain production mix from 1980’s when barley dominated overall production. It is now corn that holds a majority position in coarse grain production. In addition, corn area is expected to grow as large commercial seed producers develop shorter-season varieties and move production further north and especially west on the prairies.

For 2015-16, seeded area is intended to increase by 6% from 2014-15 due to the slightly higher forecasted prices and area in Eastern Canada that had not able to be seeded to winter wheat this past fall. Production is forecast to increase 6% to 12.2 Mt due to the higher area and an assumption for average yields. Despite the forecasted increase in production, the lower carry-in stocks will cause total supply to remain unchanged. Imports are forecast to decrease by 35% due to the higher domestic supply and a return to a historical grade pattern. Total domestic usage is forecast to increase by 1% due to only trend increases in ethanol production, industrial use and livestock feeding. Exports are forecast to increase by 40% due to a return to a normal grade pattern. Carry-out stocks are forecast to decrease by 20% and decline to 1.1 Mt which would be a 14 year low. Chatham prices are forecast to increase due to the projected increase in US corn futures and a soft Canadian dollar will remain a bullish factor. Given a return to a normal grade pattern in 2015, the Chatham basis should decline to more historical levels or closer to the previous five-year average, limiting the total price gain.

Area seeded to corn in Canada is expected to increase by 6% due mainly to lower area seeded to winter wheat in Eastern Canada and strong basis basis levels for new crop encouraged by the weak Canadian dollar and poor quality of the 2014 crop. Ontario leads the way with an intended 11% increase in corn area for 2015. On the other hand, Manitoba is intending to seed 23% less corn this year due to poor corn growing conditions throughout last crop year and a strong return to small cereal production in 2015. The weather in Canada’s Corn Belt, Ontario has been cool and wet throughout April and limited any planting until the beginning of May when conditions improved.US producers can plant, on average, 5-6% of their intended corn area per day. In the past, Ontario corn producers have been shown the ability to plant up to 15% per day so a slow start can be overcome given good conditions.

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