Wet planting conditions cloud soy outlook

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Market analysts at Agriculture and Agri-Food Canada (AAFC) expect Canada’s soybean acreage to drop 10% to 2.3 million hectares (Mha) under pressure from low prices and dry growing conditions across Western Canada. Production is forecast to fall to 6.7 million tonnes (Mt) due to the decline in area and lower yields.

Meanwhile, the outlook is less certain for Eastern Canada, where excessive moisture conditions hampered planting with the largest impact felt on the heavy, clay soils. According to the AAFC report released on Friday, the effect on production is unknown at the time of publication, and no adjustments to abandonment or yields are being made to the July release of the Supply and Disposition report. Further revisions to the August release of the Outlook Report are anticipated.

Total supply is forecast to decrease by 13% to 7.7 Mt, resulting in a 10% drop in exports to 4.7 Mt. Exports are destined for a diverse group of countries.

Domestic processing is forecast to decrease slightly to 1.9 Mt on stable domestic soyoil consumption and a shortfall in domestic soymeal supplies filled by imports of US product.

Carry-out stocks of soybeans are forecast to tighten to 0.58 Mt from 0.67 Mt in 2018-19.

Soybean prices are forecast to rise to $390-420/tonne (t) while a stable Canadian/United States currency exchange rate is forecast.

For 2019-20, the seeded area for corn in Canada is forecast to increase slightly from 2018-19. The provinces of Ontario and Manitoba contributed to most of the increase.

Production is expected to rise slightly. Imports are expected to decrease significantly due to higher domestic production of corn and barley. As a result, supply is forecast to decrease.

Exports are forecast to decrease on lowered deliveries to the EU. Total domestic use is forecast to decrease slightly on lowered feed use. Carry-out stocks are forecast to decline on reduced supply.

The average price of corn at Chatham elevators for 2019-20 is forecast to increase by 3% to $195/t from 2018-19 on support from USDA’s higher 2019-20 US corn price projections. The weak Canadian dollar will continue to underpin corn prices in Canada.

For 2019-20, the area seeded to wheat in Canada increased by 7.5% from 2018-19, according to Statistics Canada. The seeded area was 3% lower than in the seeding intentions survey. The winter wheat area seeded last fall decreased by 4%, but there was more damage during the winter, resulting in a 25% decrease for the winter wheat area remaining in the spring. The spring wheat area increased by 8.5%.

Production is projected to rise by 4% to 27 Mt. The production forecast is 1.7 Mt lower than in the June report because of the reduction in seeded area for spring wheat and higher abandonment for winter wheat.

Supply is forecast to increase only marginally, as lower carry-in stocks mostly offset the increase in production. Exports are forecast to decrease by 2% to 18.9 Mt, as more competition is expected from other exporters because of higher production. Carry-out stocks are forecast to increase by 11% to 4 Mt, but 1.4 Mt lower than in the June report.

Average Canadian producer prices for wheat for the crop year are forecast to fall from 2018-19 because of the higher world supply.

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