Pulse Market Insight #163 MAY 15 2020 | Producers | Pulse Market Insights
StatsCan Acreage Surprises
StatsCan reports always seem to generate controversy and the recent seeding intentions estimates were no exception. Between the naturally bullish farmers and the inherently bearish traders, there was something for everyone to debate this time around. In the end, we have to acknowledge that no one else conducts a survey this large but there is always room for statistical “wiggle room”.
As is frequently the case, the biggest question about the survey is the time lag between when farmers are contacted and when the numbers are released. This time around, the StatsCan acreage release was delayed even longer due to the Covid-19 complications and significant market shifts happened during that lag, especially for pulses.
For those who haven’t been paying attention, the average yellow pea bid gained 15% between mid-March and mid-May while lentil bids were up 30-40%, depending on the type. These strong rallies prior to seeding caused many people to predict a boost in plantings, and they’re probably right. The main question is how much. But first, the StatsCan numbers.
For peas, the StatsCan acreage estimate of 4.28 mln acres actually came in above the average trade guess of 4.10 mln. There were some ideas that disease issues and last year’s poor performance across large parts of Alberta would have done more to discourage plantings.
If this 1% decline from last year’s acreage is reasonably accurate, it means this year’s yield will be the biggest swing factor for the crop outcome. The 5-year average yield of 37.2 bu/acre is almost the same as last year, which would put the 2020 crop at 4.24 mln tonnes, nearly identical to last year. That should be enough to keep the market supplied in 2020/21, but just barely. Keep in mind that even though prairie-wide yields have been steady the last few years, big variations are possible.
The lentil acreage estimate was probably the largest surprise among the StatsCan estimates. The average trade guess was 4.40 mln acres and StatsCan came out at 3.71 mln, 2% less than last year. Even before the big lentil rally, observers were counting on a sizable jump in seeded area and will likely discount the official number. While we have our own doubts, it’s possible that the disease and crop rotation concerns were limiting acres more than we had guessed.
The sharp rally has certainly enticed more farmers to raise their lentil plantings but the starting point for the increase now seems lower. Even if farmers ended up adding 250-300,000 seeded acres, that would still only put seeded area around the 4.0 mln acre mark. That, together with a 5-year average yield would mean a crop of 2.3 mln tonnes and that’s not enough to meet next year’s demand, especially with the carryover from 2019/20 down sharply.
The 255,000 acres of chickpeas estimated by StatsCan may be one of the least controversial numbers in these estimates. This would be a 35% drop from last year’s seeded area and would be a good start to reducing the heavy Canadian inventories of chickpeas. Even so, the large carryover from 2019/20 means next year’s supplies won’t shrink all that much, leaving the market well supplied.
Pulse Market Insight provides market commentary from Chuck Penner of LeftField Commodity Research to help with pulse marketing decisions.