Domestic issues such as grain transportation have a big impact on producers’ profits, but let’s face it: Canadian commodity prices are also largely determined by events outside of Canada, specifically the U.S. The USDA’scame out March 31st and shed light on U.S. farmers’ plans in 2014.
For perspective, last year U.S. farmers planted 95.4 million acres of corn, 76.5 million acres of soybeans and 56.2 million acres of wheat. In total Canada planted a total of 73 million acres of cash crops in 2013.
Producers were surveyed at the beginning of March. The 2014 results reveal that producers are expecting to plant 4 per cent less corn acres (91.7 million acres). Soybean acres are expected to be up 6 per cent, to a record 81.5 million and wheat acres are expected to slightly decrease by 1 per cent (55.8 million acres). Compared to February’s USDA Outlook Forum forecasts for soybean acres are up 4 per cent, while corn and wheat acres are both down 2 per cent.
What does this mean for Canadian producers? The U.S. plantings report will support stronger corn and wheat prices; however, soybean prices could soften. Assuming average yields, soybean exports will need to be strong or carry-over stocks will be rebuilt, providing a bit of breathing room to a tight North American marketplace. .
Markets continuously evolve - as is the picture of the 2014 growing season. Corn prices have been surging lately, taking out a little bit of the relative profit advantage soybeans had over corn. It’s going to be interesting to see if the rally in corn will continue and will increase planted acres as we get closer to seeding.
Growing concerns of drought could impact planting decisions. We’ll be monitoring the monthly USDA reports to help keep you apprised of the factors that will impact U.S. crop size and help your business make marketing decisions.
James Bryan, Agricultural Economist