Market Insider

Most Canadian Wheat Acres Since 2013

Grain markets rebounded in the first week of trading of July as all the selling over the last few weeks of June came to a halt on Wednesday. Wheat futures hit a four-month low that day, while corn and soybeans hit seven and six-month lows respectively, before bargain buyers returned to the market, suggesting renewed signs of demand. More broadly, markets were also influenced by the fresh update of planted acreage estimates in Canada and lower crop ratings for U.S. corn and soybeans, which comes ahead of renewed dryness concerns for the Corn Belt where above-average temperatures and below-average rainfall are forecast for the next one to two weeks. Put simply, grain markets were oversold and this past week’s activity was the bounce many had expected.

Before digging into StatsCan’s June survey of planted acres, the trading for this coming week will center on Tuesday’s July WASDE report from the USDA. Usually, the July WASDE is a non-event, but there were some big changes in the USDA’s June 30 acreage report, namely 2.7M fewer soybean acres than the last WASDE and March acreage report posted. This suggests that the USDA will likely have to adjust some demand figures. Still, if the USDA lowers the demand for corn and soybeans, and raises inventories, this would inherently be interpreted as bearish by the market. On the flip side, if the USDA keeps demand relatively high for corn and soybeans, the report could be neutral, if not slightly bullish. For wheat, ending stocks are expected to climb slightly but I am expecting to see smaller production in Europe offset by a bigger harvest in Russia so like others, expect this WASDE to be mostly neutral for wheat.

In Canada, StatsCan released its June farmer survey results on the final acreage count for Plant 2022. The biggest changes from the initial March estimate were in spring wheat, durum, barley, canola, peas, and lentils. For the latter two, both pulses saw their acreage drop by more than 166,000 to 4.32M of lentils (flat year-over-year, +5% compared to 5-year average) and 3.37M acres of peas (-12% YoY and -15% vs 5-year average). Barley acres were printed at just over 7M total acres, but that’s down nearly 450,000 compared to the March estimate, and officially a drop of 15% year-over-year (but is only 1% below the five-year average). It seems like quite a few of these acres went into canola, especially in Saskatchewan and Alberta, both up by about a quarter-million acres each!

As for wheat, we saw durum acres drop significantly in Saskatchewan, down over 350,000 while they climbed in Alberta by nearly 130,000 for a net loss of 218,000 acres. At a touch over 6M acres of durum seeded though, this is still about 9% higher than last year and the five-year average. Comparably, winter wheat remaining didn’t change too much, still sitting well below last year and the seasonal average. 

The biggest change was in spring wheat, which saw its area expand by nearly 600,000 to over 18.2M acres, a gain of 11% compared to last year and 6% above the five-year average. Almost all the expansion in spring wheat acres was attributed to the three Prairie provinces, with Saskatchewan farmers planting over 300,000 more and Albertans drilling more than 200,000 additional acres of spring wheat. Overall, with 25.4M acres of all types of wheat forecasted for Canada this year, this would be the largest Canadian wheat seeding campaign since Plant 2013’s 26M acres.

Ultimately, heading into this WASDE week, we should expect to see more volatility, as traders return to the markets and start to model in the forecasted heat in the Midwest. That said, the heat will be welcome in the Northern Plains and eastern Canadian Prairies, which continue to have ample amount of moisture for a crop that’s still behind average in terms of crop development. Good rains have helped crops in Alberta and western Saskatchewan and while the crop is still a few weeks away from the bin, I’m now at the point where, barring any significant weather events, Harvest 2022’s potential is starting to increase in my books!

To growth,

Brennan Turner

Founder | Combyne Ag