What Are the StatsCan Highlights and Lowlights?

Last week, StatsCan issued its June estimate of seeded acreage. These estimates are considered fairly reliable as the survey covered 24,500 farmers. That’s a big enough sample to give good quality estimates that are useful to everyone in the industry, including farmers. One thing I’ve noticed over the years is that opinions among the players – farmers, grain buyers, whoever — can vary wildly no matter how well connected they are or how many fields they’ve driven past. These StatsCan survey results, despite their flaws, are still the most reliable estimates.

For pulse crops, this larger survey also allows StatsCan to provide acreage breakdowns by type. That’s helpful because markets for green and yellow peas (or red and green lentils) are very different and knowing the acreage of each type helps people figure out where these markets are going.

For peas, StatsCan estimated 2018 seeded area at 3.6 mln acres, 12% less than last year and 260,000 acres less than its April seeding intentions report. Overall, that’s helpful for the market but there are some differences between the types. For green peas, seeded area was estimated to be up 2% from last year while yellows were down 16%. Acreage of “other” peas, which includes maples and marrowfats was 50% higher, although those results should be viewed with caution.

Of course, yields are just as critical to the outlook but if we pencil in average yields for now, the acreage totals for yellow and green peas are low enough that they will cause 2018/19 exports to shrink. The demand side of the outlook is still up in the air but with strong Chinese buying, there’s less reliance on India to take Canadian peas. This raises the possibility that 2018/19 ending stocks for both yellows and greens will decline, providing some support for prices later in 2018/19.

Lentil acreage is also forecast to drop from last year. StatsCan pegged seeded area at 3.8 mln acres, 15% less than last year. There’s a large difference though between reds and greens, particularly large greens. While seeded area of red lentils is expected to drop 32%, green lentil acreage is estimated to expand by 26% and other greens will be up 9-10%.

While fewer acres of reds is certainly helpful, the 2018/19 market will be carrying over large supplies of old-crop lentils and that will keep inventories quite high. For greens, there’s less of an old-crop carryover but the boost in acreage (assuming average yields) would mean a large increase in 2018/19 supplies. Even with a recovery in 2018/19 exports, ending stocks will remain large and keep pressure on prices.

A sizable increase in chickpea seeded area was expected, but StatsCan’s estimate of 469,000 acres, 135% more than last year, was a big surprise. Even if this summer’s yields aren’t spectacular, the crop will expand significantly. The US is Canada’s largest buyer of chickpeas and it’s also looking at a larger crop. That will make export business more of a challenge in 2018/19 and could lead to a buildup in Canadian supplies.

In its April report, StatsCan had shown a large decline in dry bean acreage. Now in June, that estimate was raised somewhat, but seeded area is still 15% lower than last year. The largest acreage declines were seen in white beans, down 28%, while coloured beans were down 8%. That, together with a drop in US acreage will be friendly for prices.

Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.