Soy beans

AG CANADA’S OUTLOOK FOR THE 2016-17 CROP YEAR

on February 11 | in Tek Talk | by | with No Comments

Increased plantings of soybeans, a cut in corn acres and higher winter wheat production highlight Agriculture and Agri-Food Canada’s first formal look at the 2016-17 crop year.

In the report released January 25, ministry analysts noted that the crop outlook will continue to be clouded by uncertainty regarding the price of oil and the Canada/U.S. exchange rate.

For corn, seeded area is forecast to decrease by 4% from 2015-16 due to the forecasted higher eastern Canadian winter wheat area and competition from other cropping choices. Production is forecast to decrease 11% to 12.1 Mt due to the lower area and the assumption of average yields.

Despite record carry-in stocks, the lower production will cause total supply to decrease by 3%. Imports are forecast to increase by 33% due to the lower domestic supply. Total domestic usage is forecast to increase slightly due to trend increases in ethanol production, industrial use and livestock feeding.

Exports are forecast to decrease by 29% due to the lower total supply and high world corn stocks. Carry-out stocks are forecast to decrease by 22% to 1.6 Mt and remain close to the previous five and ten-year averages. Considering average basis levels, the Chatham corn price is forecast to remain unchanged as a slight increase to the projected US corn futures will be offset by a stronger Canadian dollar.

Despite the US corn price decline experienced in 2015-16, US corn area is forecast to increase slightly in 2016-17 due mainly to the reduction in US winter wheat area and higher prices. The US corn price will see a slight price recovery in the new crop year, however; the strong US dollar will remain a drag on exports and ultimately limit any overall price gain. Based on normal cropping conditions the world will not experience any shortage of corn and stocks will remain abundant, again limiting price gains for 2016-17.

With respect to soybeans for in 2016-17, planted area is forecast to rise by 4%, to 2.3 mln ha, on expected good returns. Production is forecast to decline by 8%, to 5.8 Mt, as yields are assumed to decline to normal from the bumper yields experienced in 2014-15.

Supplies are forecast to decrease by 9% due to lower carry- in stocks and lower production. Exports are forecast to fall by 0.2 Mt, to 3.9 Mt, on a combination of reduced world demand and tightened domestic supplies.

The domestic crush is also forecast to fall by 0.3 Mt on a lack of domestic soybean supplies and competition from burdensome world soyoil and soymeal supplies. Carry-out stocks are forecast to fall to 0.28 Mt from 0.35 Mt in 2014-15.

Soybean prices are forecast unchanged from last year at $395/t-$435/t as pressure from lower US soybean prices is offset by the weakness of the Canadian dollar. The main factors to watch are South American production and exports, US planting intentions, the impact of Chinese financial instability on soybean imports and changes in exchange rate values.

As for wheat (excluding durum), area seeded in Canada is forecast to decrease marginally as a 24% increase for winter wheat is more than offset by a 2% decline for spring wheat. The increase in seeded area for winter wheat was in Ontario where seeding conditions in the fall of 2015 were much better than in the previous fall. The winter wheat seeded area in western Canada was nearly the same as for 2015-16.

In western Canada, spring wheat has competition from durum, oilseeds and pulses which is expected to limit the seeded area. Production is forecast to increase by 5% to 23.3 Mt because of higher yields. Supply is expected to fall by 7% as the rise in production is more than offset by lower carry-in stocks. Exports are forecast to fall by 9% to 16 Mt because of the lower supply. Carry-out stocks are forecast to fall by 7% to 2.8 Mt.

World all wheat (including durum) production is forecast to decrease by 20 Mt to 715 Mt because of lower seeded area and lower yields. The supply is forecast to fall by 1 Mt to 947 Mt, as lower production is mostly offset by higher carry-in stocks. Total use is forecast to increase by 6 Mt to 722 Mt due to growing demand in the food market. Carry- out stocks are forecast to fall by 12 Mt to 220 Mt.

US winter wheat seeded area fell by 7% from 2015-16 and the spring wheat area is expected to decrease by 4%, resulting in a 6% overall decrease. Production is forecast to decrease by 1.8 Mt to 54 Mt, while supply increases by 3.1 Mt to 82.7 Mt. Domestic use is expected to rise by 0.6 Mt and exports are forecast to rise by 1.6 Mt. Carry-out stocks are forecast to increase by 0.9 Mt to 26.5 Mt.

The average crop year producer price in Canada for wheat is forecast to be the same as for 2015-16 because support from the lower Canadian supply is expected to be offset by the forecast for a slightly stronger Canadian dollar, the higher US supply and the plentiful, albeit slightly lower, world supply.

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