Friday February 23 2018



Agriweek Canadian agribusiness authority since 1967


After six rounds of the NAFTA negotiations consensus has been reached on 10 of the 30 chapters, including energy and telecommunications. This represents about 40% of the agreement, however these are non-controversial subjects in which US demands are not extreme. However there has been no movement whatsoever by the US towards compromise on the three make-or-break serious issues that the Americans brought forth at the start of the process: US and North American content in automobiles, a five-year sunset provision and the dispute resolution procedure. From this standpoint the talks are at a stalemate. At the conclusion of the latest session in Montreal on January 29, the three ministers and other officials said progress was made but no one was able to describe exactly what it was or what it means to the chances of ultimate success. Everybody was talking about the 'work' that remains to be done, when in fact the whole business could be wrapped up in a day if there were an earnest interest in Washington to preserve the agreement. It was agreed that the talks are worth continuing, with the next session in Mexico City starting February 26 and lasting nine days, followed by an eighth round in Washington in March. There was never a risk that the negotiations would not continue after Montreal, so it was not news. The general manager of the negotiations is Lighthizer, who repeated that he is not satisfied with Canadian responses to the original set of American demands. He publicly criticized Canada for its “massive attack” on the entire body of US trade law in its across-the-board complaint last month to the World Trade Organization alleging US trade remedy procedures are not WTO-compliant. He did not link it directly to the NAFTA process but it cannot help but be part of the equation.

Last week Canadian foreign minister Freeland hinted that the WTO action could be withdrawn if the US ended its anti-dumping action against Canadian softwood lumber. If that was the intent, it is an even more naïve, crude and dangerous than it seemed, a clumsy, amateurish blackmail attempt at the worst possible time. Under US law the government cannot end a trade remedy action part-way through. Such actions are initiated by American companies and industries which claim import injury and can only they can withdraw them. The Montreal session underscored the strong support NAFTA has in the US among industries that benefit from it and legislators of Trump's own party. A delegation of American farmers from the ad-hoc Farmers for Free Trade was in Montreal for the talks, trying to send US negotiators the message that NAFTA must be preserved, since Canada and Mexico are America's top two agricultural export markets. Several Congressmen of both parties also attended in Montreal and got a briefing from senior negotiators. They were also on the side of preserving the agreement. (02/05/2018)


The Trudeau government's decision in December to attack US trade law at the World Trade Organization must rank with the most irresponsible and plain stupid trade strategy decisions of all time. There are worse things in Canada-US trade relations than the abrogation of NAFTA, and before this is over Canada may well suffer them. The Canadian government filed a complaint at the WTO attacking American trade practices used to address dumping of imports on the US market at unfairly low prices and imports which are underpriced because exporters receive subsidies from their governments. These procedures have been in place for many years and apply to all countries. The complaint alleges that the US applies duties at higher rates than allowed by the WTO, calculates duty rates improperly, illegally assesses penalties retroactively and limits or ignores evidence from third parties. It charges that the six-member US International Trade Commission is systematically biased against exporters and that its voting system is rigged. Over 120 examples from US trade actions are cited, not only against Canada but also the EU, China, India and Brazil. In fact about half of the examples cited involve China. Trump intensely dislikes the WTO because he perceives its rules to be restrictions on US lawmaking and incursions into domestic affairs. If the Canadian complaint were to succeed, impairing the ability of the US to use its anti-dumping tools would open the gates to low-ball imports from all WTO countries, specially China. There is no way that any administration would stand for such an outcome and this could conceivably start a chain of events leading to US withdrawal from the trade body, or at least its complete disengagement. If the Canadian action is dismissed or fails at any point, the damage is still already done. There are countless ways, far beyond lumber and newsprint, in which the administration with or without Congress can frustrate or block Canadian imports that have entered freely for decades. (01/22/2018)


China has stepped up as the runaway top importer of Canadian malting barley because of the greatly reduced Australian barley harvest and associated quality issues. In fact in the crop year to date China is the only sizable buyer, taking 400,000 tonnes to October 31 compared to 158,000 tonnes in the year-earlier period. No other country, including Japan which traditionally has been a reliable customer for feed barley, has taken more than a fraction of China's volume. China is also the biggest single buyer in the crop year to date of Canadian canola, peas, flax and soybeans. The Canadian supply of malting-grade barley is the highest in four years because of a favorable growing and harvest season and quality is exceptional. If not for China, after domestic malt demand is satisfied the balance would be going into the feed trade. Domestic use recorded by the Canadian Grain Commission is down slightly in the crop year to date at 432,000 tonnes. (12/18/2017)


From Statistics Canada's final 2017 crop production report issued December 6 it would be impossible to know that the south half of Alberta and Saskatchewan had the driest growing season of the last 20 years. Western farmers seeded 2% more land to the eight major crops and harvested just 1% less than in 2016, when production was the second-largest in history after 2013. Total production of eight major crops in western Canada was 69.46 million tonnes and for all of Canada 91.94 million, compared to 70.23 and 91.73 in 2016. The all-time high was 93.59 million tonnes in 2013. The canola crop was a record 21.31 million tonnes, with seeded area 13% higher and average yields only 5% lower. Yields of spring wheat and oats were virtually unchanged from 2016. Only the crops mainly grown in the south of the prairie grain belt, notably durum, flax and winter wheat, showed markedly poorer results. Manitoba farmers had higher yields of all crops except soybeans and corn and record total production. Statistics Canada again drastically underestimated canola yield and production in its earlier 2017 reports, which put the crop at 18.2 million tonnes in the July survey and 19.7 million in September. Canola yield and output exceeded all expectations by around 1.5 million tonnes, topping the previous record in 2016 by 9%. Seeded area in the west increased by 13% to a record 22.92 million acres while production rose 9%. National all-wheat production was estimated at 29.98 million tonnes, 5.5% less than in 2016 but 2.85 million tonnes or 10.5% above the September estimate. The spring wheat crop was put at 22.16 million tonnes, up from 20.45 million in 2016, but the durum harvest of 4.96 million was 36% smaller than in 2016 on a 16% decline in seeded area and a 28% drop in average yield. Durum acreage, yield and production were record-high in 2016. Winter wheat production in Ontario was 2.19 million tonnes, 9% smaller as average yield declined 5%. Eastern corn and soybean estimates were lowered from the September report. The national soybean number of 7.71 million tonnes was 7% less than 8.32 million in September and corn 14.10 million vs 14.31. However the soybean harvest is a record because of increases in Saskatchewan and Manitoba. The corn crop is the second-largest. Average yield estimates were reduced for both crops from the previous report's. The soybean yield of 39.1 bushels is 12% under 44.2 in 2016. Corn yield of 159.7 bushels was reduced from 160.9 in the previous report but was a bushel higher than the 2016 average of 158.7. The Quebec corn crop was 3.82 million tonnes after a 5.3% increase in acreage was offset by a 5% decline in average yield. In contrast to the prairie drought, moisture was excessive at times in Ontario and eastern Canada. (12/11/2017)


Statistics Canada reported on November 25 that Canadian farmers took in $45.35 billion in farm-gate cash receipts during the first nine months of 2017, up 3.3% from the like period of 2016. It was a January-September record and the seventh straight year-to-year increase. All provinces except Ontario and the Atlantic region saw increases. The biggest gain was 7.5% in Manitoba with Saskatchewan up 3.6% and Alberta up 6.1%. Alberta was the top farm-cash province at $10.88 billion, followed by Saskatchewan at $10.43 billion and Ontario $9.08 billion. Revenue from crops nationally increased by 2.6% after a 6.8% jump from the 2016 period over 2015. It was the sixth increase in nine-month crop receipts of the last seven years. Increases were mostly attributed to canola and wheat, with declines in lentil, corn and soybean revenue. The farm-gate value of canola sales was 9.7% higher at $7.22 billion as prices increased 5.7% and marketings 3.8%. Canola was the top-grossing crop, accounting for 29% of all crop-based revenue nationally and 42% on the prairies. Canola sales were just 9.8% of crop receipts in 1989. Receipts from non-durum wheat increased 11.6% to $3.80 billion on an 8.5% gain in marketings and a 2.9% increase in prices. Cash revenue from lentils dropped 17.3% after a 30.6% drop in prices. Soybean receipts were 11.6% as marketings declined by 13.4%. Farm cash receipts from livestock sales increased 2.3% to $18.40 billion. Livestock revenue for the three quarters rose in seven of the last eight years, the exception being 2016 when there was a steep 6.0% drop. Livestock receipts were 4.5% higher in Ontario and 3.3% higher in Quebec. Cattle revenue dropped by 9.6% in Saskatchewan and 19.9% in Manitoba on lower cattle numbers but were 3.3% higher in Alberta. Sales of cattle and calves were down 2.8% as prices averaged 3.8% lower. Hog receipts for the period rose 7.6% as prices averaged 5.7% higher and marketings were 1.8% higher. (12/04/2017)


Combined sales and shipments of all US wheat for the marketing year including yet to be shipped are down 5% at 620 million bushels compared to 680 to the same date a year ago, soybeans down 15% at 1.205 billion compared to 1.413 and corn down 23% at 841 million. The US agriculture department in its latest supply-demand estimates predicted wheat exports for the entire 2017-18 crop year at 5.5% lower, corn 16% lower and soybeans 3.5% higher than the prior year's. Export sales and shipments of hard red spring wheat are down 15% at 172 million bushels compared to USDA's projection of a 17% decline. The US crop year for wheat ends on May 31, others August 31. Slow exports, especially of corn and soybeans, are depressing crop futures and cash prices, but not by enough to make American crops price-competitive against South American soybeans and Black Sea wheat and corn. Chicago futures respond most directly to monthly USDA estimates of year-end carryover. The department will have to soon start adjusting export estimates down and carryover estimates up. Either way, export performance in the season so far is not a good omen for prices into 2018. (11/27/2017)


The fifth of seven rounds of NAFTA talks took place in Mexico City last week without minister-level participation but with the expected result. US, Canadian and Mexican cabinet officials agreed not to attend so that negotiators could concentrate on technical details. They did manage to write a bit of text on digital trade, food safety measures, telecommunications and customs enforcement. However Canada and Mexico flatly rejected US positions on the four major points (minimum US and NAFTA automotive content, a five-year sunset clause, elimination of the dispute settlement mechanism, Canadian supply management). Canada and Mexico did attempt to compromise on the US demand that a new agreement is to automatically expire at the end of five years unless renewed; both countries would accept a five-year review without default termination. There is nowhere to go on these items unless the Trump administration backs right down. US Trade Representative Lighthizer said Canada and Mexico are not “seriously engaging” on US demands for a rebalanced agreement. For the Trump administration another step was used up, strengthening the idea that the talks are not getting anywhere and reinforcing the alleged case for terminating the agreement to protect US interests. While the talks were underway Trump again repeated in a media interview that the agreement would have to be cancelled in order for the US to get a better outcome. The US strategy seems to be to let the negotiations run out without visible progress and issue notice of withdrawal from NAFTA, perhaps panicking Canada and Mexico into accepting harsh US terms. (11/27/2017)


For some hours on November 10 it was reported from Vietnam that the effort to resurrect the Trans Pacific Partnership agreement had been scuttled by the prime minister of Canada. The prime minister now-famously failed to show up at a meeting of heads of state of TPP countries, who were in Vietnam for an ASEAN meeting, where the decision was to have been formally confirmed. Just hours before, trade minister Champagne participated in an announcement by all 11 remaining members that the TPP would proceed without the US on the terms already agreed. It was not Canada's finest hour in trade or international affairs and it got worse. Trudeau cited a “scheduling conflict”, implying he had something more urgent to do in Vietnam than support a trade agreement of immense importance to Canadian agriculture and the export economy. This jerkish, churlish behavior reduced Canada's stature in the TPP group and beyond. The image projected was that of a charismatic but immature, inexperienced and incompetent leader who, not knowing what to do did nothing, without notice and without even elementary courtesy to TPP member leaders. Trudeau was quoted as saying the Canada “was in no hurry” to sign the new agreement, an insult to every other leader who considers the TPP to be urgent, then announced that Canada will require changes before it signs. The Japanese prime minister probably saved the agreement by calming infuriated TPP members, particularly Australia and New Zealand. Momentum has been lost and a clear path to a quick and almost effortless implementation of this agreement has been destroyed by Canada. The final statement from the Vietnam meeting said the 11 countries have agreed to the “core elements” of an agreement, but “more work remains”. The agreement will be renamed the 'Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP)'. The statement said that after “further technical work” a new text will be presented for signature: in other words a renegotiated TPP. Several areas of the agreement will be re-opened for negotiation, exactly what Japan and other countries tried to avoid. (11/20/2017)


Even investment professionals do not necessarily agree whether Bitcoin, the cryptocurrency, is a medium of exchange with the same function as national currencies or an asset class or a store of value. It is useless for either purpose and to trade in and especially to own bitcoins is as dangerous a gamble as any casino game. Bitcoin was created under murky circumstances in 2012 with the intent that one bitcoin would represent approximately one US dollar. By the end of 2013 it was at nearly $1,000, then settled in at between $500 and $750 until the end of 2016. It rocketed to $3,000 in June 2017, $4,900 in October and a record $7,880 in early November. In 48 hours on November 8 it lost $1,000. The 24-hour high and low on November 13 were $6,741 and $5,816. Bitcoin cannot be a medium of exchange because it is not backed by anything. Before the gold standard was abandoned, paper money represented a quantity of metallic gold. Since then currencies are backed by the faith and credit of governments, which includes the capacity of most of them to tax the hell out of their citizens and borrow in their name. As a store of value the bitcoin also does not represent anything tangible, existing only as digital entries in computer files. It has no physical form or equivalent. It can be exchanged for cash or certain goods but not on any regulated or supervised market. Nevertheless trading in various grey markets is massive. Daily volume has been as high as 1.65 billion bitcoins and market capitalization last week was $108.5 billion. The price fluctuates according to the supply placed into trade and the demand, which is almost entirely speculative. Since there is no central repository, information about who owns and trades bitcoin and the uses it is put to is vague and imprecise, but it appears that ownership is extremely concentrated and so subject to manipulation. Less than 1% of accounts hold an estimated 28% of all bitcoin while 42% collectively own less than 1/10th of 1%. (11/20/2016)


The federal government last week relented on an intention, announced in the 2017 March budget, to end historic tax treatment of deferred cash grain tickets long used in western Canada. Deferred tickets, which are literally post-dated cheques, allow cash receipts from grain sales late in the calendar year to be shifted into the next tax year. At the time the finance minister said this deferral was inconsistent with accrual accounting used by all other taxpayers and outdated because of the termination of the Canadian Wheat Board single-desk in 2012. The practice was defended by the farm lobby as necessary to manage uncontrollable variations in production, grain cash income and grain delivery logistics which other taxpayers do not face. Of course nothing has changed since the spring budget except the Liberal government's realization that its small-business tax proposals, also since largely rolled back, were a huge political miscalculation. This is a way to lose fewer votes in the 2019 election. Since the deferred cash system is used only in western Canada, the decision to not eliminate it is a rare regional concession from this government. (11/13/2017)


It is almost physically impossible for dryness in the spring of 2018 to be avoided, especially in the approximately 40% of the prairie grain belt that had droughty conditions during the 2017 growing season. The final Saskatchewan crop report of the year estimated topsoil moisture at 60% short to very short and 80% in the province's southern third. In Alberta, after a rainy spell in early October, surface soil moisture was adequate roughly north of a line through Red Deer but 50 to 60% poor or fair in the south. Manitoba entered the winter with reasonable topsoil moisture except in the often-dry southwest corner. Subsoil moisture is low throughout the region even where topsoil moisture is passable. If La Nina conditions actually develop, as some predict, western Canada can expect above-average snowfall over the winter. But snow contributes little to topsoil moisture in the spring and practically nothing to subsoil moisture, especially if the spring breakup is rapid. Even if rain next spring is again excessive as in the last five years, subsoil moisture will not be restored. The statistical chances after a string of wet seasons is that early 2018 precipitation will be average or below. A drought catastrophe was avoided in 2017 by saturation of subsoil moisture accumulated over the multi-year wet spell. (11/13/2017)


A month has now passed since India declined to renew the exemption for Canadian pulse shipments from a dubious rule requiring cargoes to be fumigated with methyl bromide at place and time of loading. Another week passed with no explanation either from the Indian government or the Canadian Food Inspection Agency. At least three representatives of large pulse exporters have been to India recently and returned not much wiser. CFIA and government officials have also visited India recently but do not appear to have achieved anything. The authoritative export-import data services Seair and Zauba have no recent information. Indian importers are applying for import permits from Canada but neither permits nor explanations appear forthcoming. In the first half of the current crop year to September 30, Indian imports of all pulses were 3.5 million tonnes. For the second half they are expected by trade sources to drop to 1.5 million, but for the crop year will be about 5.0 million. Indian pulse imports were a record 6.6 million tonnes in 2016-17. Imports continue, but not from Canada. During August, the first month of the 2017-18 crop year, only 10,000 tonnes of peas and no lentils were shipped to India; a year ago pea exports were 159,000 tonnes. Cargoes and containers of Australian, Ukrainian and US lentils and other pulses continue to arrive. The fumigation exemption for exporters which cannot treat outgoing cargoes was extended to December 31 while Canada's ran out on September 30. There is a double threat to the pulse market: rising Indian production which brings it closer to self sufficiency, and overt discrimination against imports from Canada. A Canadian trade mission will visit India starting November 13, which will be an opportunity to get to the bottom of this matter. If it does not return with a clear picture and some means of resolution it will be more evidence that Canada has become a disfavored supplier. There is an explanation for this but it is deliberately not being given. There is no known issue with quality of Canadian crops and indeed the 2017 harvest produced excellent quality of both lentils and peas. Canadian exporters and Indian importing companies have good and long-standing trade relations. Prices adjust themselves but Canadian sellers do not appear to be getting the chance to meet competing prices. In a time like this there is naturally a search for theories that fit the facts. One involves the hypercharged political and religious atmosphere in India. Indian politicians have long accused Sikh immigrants in Canada of sympathy with, and even material assistance to, Sikh separatist causes. There is new agitation in India for a separate Sikh state, which the Modi government is trying harder than previous administrations to suppress. It happens that the Trudeau cabinet and the Liberal caucus have outsized representation of Sikh members. The possibly of a connection cannot be ruled out. (11/06/2017)


ICE Futures Canada, the former Winnipeg Commodity Exchange, finally shut down its milling and durum wheat and feed barley contracts late last month. The delisting was a formality because the contracts never had significant volume or open interest and never reached the critical mass of functioning markets. Barley was the only contract with any volume since listing 2012; the last trade was on November 24 2016, when open interest of 25 lots zeroed out. The ICE's contract committee voted to stop flogging the dead horse on October 25 and the computers were turned off the next morning. The contracts were not successful because they did not attract enough trade to offer liquidity, which is not possible without attracting trade. The availability of the established Minneapolis spring wheat contract, especially after Canadian wheat was declared deliverable in January 2012, left little room or need for a Winnipeg milling contract, though a durum contract would have been useful. Minneapolis trade has set monthly volume and open interest records in 2018. Canadian grain companies account for up to a third of all volume. The Canadian non-durum spring wheat crop is over 800 million bushels in an average year compared to 425 million in the Dakotas and Montana. (11/06/2017)


The stunning news came out last week that the World Health Organization's cancer agency knowingly and deliberately altered and edited findings from its review of scientific literature for data about possible cancer-causing properties of glyphosate. The official report in March 2015 from the International Agency for Research on Cancer rated glyphosate as a Group 2a carcinogen, a class for substances that probably cause cancer. While the report was thoroughly discredited by other experts for its low quality and questionable conclusions, it was not until the Reuters news agency managed to find and compare an initial draft of the report with its final version. It found 10 instances where material not supporting the cancer conclusion was removed or edited. The IARC assessment results were apparently pre-conceived. The cancer connection came solely from laboratory animal studies, many of which were questionably designed and inconclusive. Among material removed was an unequivocal conclusion by the US Environmental Protection Agency that numerous studies showed beyond doubt that glyphosate had not caused any abnormalities in mice. There was no evidence to so much as imply an association of cancer in humans with glyphosate. The WHO panel also committed outright fraud by inserting external and unrelated study results to support its anti-glyphosate position. The flaws in the WHO report which were identified by various sources evident earlier, before the red-handed evidence was found by Reuters, were systematically ignored by pesticide opponents. Massive publicity by environmental organizations has left the widespread impression that glyphosate is dangerous and for calls for restrictions. The report is the basis for class-action litigation against Monsanto, the developer, for allegedly failing to warn users of its hazards. Many other manufacturers now produce it since glyphosate patents expired in 2012. The state of California has placed glyphosate on a list of chemicals “known to the state” to cause cancer. A court challenge by Monsanto against the decision was unsuccessful, although the case has been appealed. The same report has complicated renewal of glyphosate registrations in the EU. (10/30/2017)


In the first 11 weeks of the 2017-18 crop year western farmers delivered an average of a million tonnes of grains and oilseeds a week into the commercial system, almost exactly the same amount as a year earlier and in fact similar for the period over the last four years. The railways took it away more or less as quickly as it came in, with the result that country elevators did not get congested except for isolated instances, and lack of elevator space was not a limitation to producer sales. Elevator free space was consistently over 20% of working capacity or roughly a million tonnes. Free space was particularly ample at the largest elevators. The railways were for the most part meeting shipper demand. Shippers requested 46,500 CNR cars in the crop year to October 15 and received 42,200, and ordered 48,300 CPR cars and got 47,200. The ratio of cars ordered to cars supplied in the week for which they were needed was similar through the period, though lower than a year earlier. To the end of the 11th week of the crop year grain shippers ordered approximately 90,000 hopper cars. About 74% were spotted during the required week, about 5% were delivered early and 14% within the following week. Historically speaking this is quite a good performance on the part of the railways. The CPR outperformed the CNR in timely car supply, delivering 74% of cars ordered during the required week to the CNR's 68%. Delivery on time or a week late was 80% for the CPR and 75% for the CNR. A year ago the CNR had a better reliability record than its competitor. For the crop year to date 80% of cars on CNR lines and 85% on CPR lines were supplied in 100-car blocks, 13% and 12% in 50-car blocks and 7% and 4% in smaller strings, including 3% and 2% as single cars. In 2011-12 25% were in 100-car blocks. Producer car shipments, while still an insignificant percentage of total movement, showed a substantial gain in the first 11 weeks of the crop year, from 57,000 tonnes in the 2016-17 period to 87.000. In Alberta shipments rose from 4,300 tonnes (about 50 cars) last year to 12,800 tonnes. Two-thirds of movement was wheat, durum and oats. (10/30/2017)


The best that the farm equipment sector hoped for going into 2017 was to maintain the previous year's business. Instead sales of big-dollar machines rose nicely in the last few months with tractor sales in the serious sizes up 8% and combine sales up 36% in the year to August 31. During August tractor sales were 35% higher and combine sales 71% higher. Factors in the increase were the higher Canadian dollar, low interest rates and manufacturer incentives. Farm-size tractor sales during August were 670 units vs 491 in the year-earlier month, according to the monthly report from the Assn of Equipment Manufacturers. For the year to date deliveries were 6,241, up 8% from 5,783 year-ago. Sales of large 2-wheel drive models were 229 for the month and 2,197 for the year compared to 174 and 2,221. Large 4-wheel-drive sales were 32 for August vs 19 and 588 for the year vs 495. Harvester combine sales were 299 for the month and 1,347 year-to-date compared to 175 and 991. US tractor sales for August were down 10% at 5,951 vs 5,974 and 49,509 year-to-date compared to 51,487. US combine sales were 380 for the month and 2,459 for the year to August 31 vs 387 and 2,592. (09/18/2017)


Put in the simplest terms, according to Statistics Canada's first crop survey of the season released on August 31, Canadian farmers in 2017 planted 3% more land to the main crops and harvested 19% less grin and oilseeds. In western Canada they seeded 2% more acres and harvested (or expect to harvest) 14% fewer tonnes. Across all crops average yields were 11% lower nationally and 15% lower in western Canada. Yields for the major crops together averaged 9% less in Manitoba, 22% less in Saskatchewan and 14% less in Alberta compared to last year's near-record results. Production of the main crops was reported at 82.62 million tonnes compared to the record of 91.64 million in 2016. That is the bottom line of the 2017 drought in Saskatchewan and Alberta. The most anticipated figures had to do with canola. Statistics Canada revised its 2016 canola production estimate to 19.60 million tonnes from 18.43 million originally reported to conform with later information from stocks reports. The 2017 canola harvest was put at 18.20 million tonnes based on an average yield of 35.2 bushels per acre and a 2.6-million acre increase in seeded area. The Saskatchewan canola harvest was estimated at 9.22 million tonnes, down 14% from last year's revised record of 10.68 million. Production in Alberta declined by 2% after seeded area rose 18%. In Manitoba the canola harvest was projected at 2.79 million tonnes vs 2.61 million last year as similar yield of 38.9 bushels met a 7% increase in seeded area. The national wheat crop was estimated at 25.54 million tonnes, off 20% from 2016 and the smallest Canadian wheat harvest since 2011. Average yield for all wheat was 20% lower at 42.5 bushels per acre with a 29% drop in Saskatchewan. The durum crop is expected to be the smallest in seven years at 3.89 million tonnes, back to back with the 2016 record of 7.76 million. Seeded area dropped 13% while average yield was drought-reduced by 42%; most durum is grown in the areas of southern Saskatchewan that were the driest. Spring wheat production was reported at 18.88 million tonnes, down 8% from 20.45 million last year with average yield was 8.5% lower. Winter wheat production was estimated at 2.75 million tonnes, 21% smaller because of lower acreage and yield in western Canada. As expected from seeding statistics, this was the year of the soybean. Acreage increased by a third nationally to 7.28 million acres and by two-thirds in Manitoba and Saskatchewan to 3.14 million. Production of 7.74 million tonnes, including 1.83 million in the west were new records. Corn production in Ontario rose 6% to 8.56 million tonnes, with increases in both area and yield. (09/02/2017)


It may be hard to believe, but the shock of the mad cow disease outbreak 14 years ago could be inhibiting Canadian cattle herd expansion and the growth of the beef industry to this day. There are few other explanations for the static cattle numbers reported by Statistics Canada on August 18. As of July 1 the Canadian cattle herd was 12.95 million, a gain of just 35,000 head from the same date a year earlier The number of beef cows and heifers kept for maintaining and enlarging the herd increased by 75,000 to 4.47 million. Beef cow numbers were just 1.2% higher, by 44,000 to 3.80 million. Beef cattle numbers have been quite steady since 2015, after declining 3% during the previous year. The Canadian cattle herd is now 23% smaller than its record set on July 1 2005, when beef cattle numbers ballooned because of the mad cow crisis. The first case of mad cow disease was confirmed on May 20 2003. Importers of Canadian beef, including the US, immediately suspended Canadian imports. Cattle prices crashed and producers, with some government assistance, retained cattle on their farms until conditions slowly improved starting in 2005. During the year ended July 1 beef cattle numbers increased in Manitoba and Saskatchewan by 2% and 1% respectively but declined 0.5% in Alberta. The drop in Alberta may be accounted for by the closure of Western Feedlots early this year. The company's three locations had a capacity of nearly 100,000 head; cattle that Western did not buy were more likely exported to the US than absorbed by other Canadian feedlots. Numbers in Ontario increased 1%. The number of farms reporting cattle declined by 1.5% over the year to 74,530 and by 7% over the past two years. Breeding herd numbers do not predict a change in the trend. Beef heifers kept for breeding were up 0.6% to 673,200 head and beef cows by 0.5% to 3.8 million, but the total will increase the 2018 calf crop by only about 40,000. Calf numbers on July 1 were unchanged at 4.2 million. (08/25/2017)


The NAFTA renegotiation began on August 16 in Washington. It was intensively reported with little actual information, except that US trade representative Lighthizer told reporters that the US will insist on measures that will reduce US imports from NAFTA countries and increase exports. He specifically mentioned the Canadian market for dairy products, wine and grain, and a stricter system of identifying the origin of imports into the US. The meeting continued until August 20; A news blackout was expected so as not to negotiate in public. There was nothing new or unexpected in the US stance but it emphasized the Trudeau government's unfitness for the task. On the day before the formal commencement of talks, foreign affairs minister Freeland outlined Canadian objectives for the first time. Amazingly, the list consisted largely of its radical and irrational ideas on gender, feminism, worker and aboriginal rights and environment, and the bizarre idea that Canada could impose them on the whole continent. The notion that the US Congress, let alone the Trump administration, would ever entertain any of this, especially climate change, as legitimate NAFTA matters is naive and delusional in the extreme. It is guaranteed to further stiffen American positions if that is possible, make American negotiators take Canada less seriously and complicate the bargaining process for no purpose. Canada is in no position to draw red lines but has apparently done so regarding Chapter 19 (the dispute settlement procedure) and Chapter 11 (government procurement). Freeland also categorically repeated that Canada will not give up or bargain away agricultural supply management. It was strongly hinted that Canada could exit the NAFTA agreement if its positions are not accepted. That makes three out of three NAFTA member-country officials who have talked of scrapping the agreement. (08/18/2017)


A fistful of new records was set in the 2016-17 crop year which ended July 31. Off-farm deliveries in the west of the seven major grains (wheat, durum, barley, oats, canola, flax, peas) were above 50 million tonnes for the first time in a crop year. When lentils are added the total comes to nearly 55 million tonnes, an average of over a million tonnes a week. The grain handling and transport system performed without any of the problems that plagued recent crop years, such as primary elevator congestion and rail shipping breakdowns. Exports were the second-highest in history after 2014-15. When lentils and minor crops are added, according to Canadian Grain Commission figures, a new export mark at was made 36.95 million tonnes. Canola almost literally set things on fire. Exports tracked by the Commission were a new high at 10.88 million tonnes, and so was domestic use at 9.11 million. The previous five-year average was 8.62 million of exports and 7.19 million in domestic crush. Lentils became a major crop with producer deliveries of 1.94 million tonnes, up 36% from the prior year. Only 755,000 tonnes went out of the country through licensed terminals, with the majority exported in containers, so that official Commission figures (which do not include container shipments) understated exports by a million tonnes. An additional (for the time being unknown) quantity of grains and canola were trucked directly across the US border without CGC supervision. The statistics for peas were also record-setting, as the trade took in and sold 55% more volume than in the crop year before. In a crop year of unusually poor quality, into a world market glutted to the armpits with wheat, Canadian grain companies managed to sell and ship 14.58 million tonnes of non-durum and another 4.29 million of durum, just 9% less than in 2015-16. During the last five crop years the private trade exported an average of 15.89 million tonnes of non-durum wheat a year; in the last five years of its single-desk monopoly the Canadian Wheat Board managed an average of 13.01 million. Soybeans and corn are now significant export crops. Soybean exports recorded by the Grain Commission totalled 3.68 million tonnes, a record and 19% more than in the prior year. Soybean exports, which exceeded terminal receipts, were the third-highest of any crop and approached the volume of durum. Intake of soybeans by the western elevator system was 1.75 million tonnes, up 32%, along with 421,000 tonnes of corn. (08/21/2017)


The US agriculture department's monthly supply-demand report for August was extremely negative for prices and futures markets fell hard within minutes of then the August 10 release. Compared to last month all-wheat production was dropped just 21 million bu and corn just 102 million while the soybean crop was raised by 121 million. Spring wheat was estimated at 364 million bu and durum at 51 million vs 385 and 57 a month ago, a very small adjustment given crop condition reports. Hard red spring wheat carryover was projected at 122 million bu vs 131 million last year and durum at 26 vs 22 million. Corn carryover was put at 2.273 billion vs 2.325 last month and 2.370 last year. USDA expects soybean carryover of 475 million bu vs 460 last month and 370 last year. USDA estimates for world 2017-18 wheat production were raised from 737.8 million tonnes last month to 743.1, down 1.5% from 755.0 last year. Wheat use was put at 737.0 million tonnes, 6 million tonnes less than production, vs 735.2 last month. Global wheat carryover was raised to 264.6 million tonnes from 260.6 last month. The wheat stocks-to-use ratio for '17-18 is unchanged at 35.9%. USDA estimated the world coarse grain crop at 1.314 billion tonnes, down from 1.316 last month and 1.363 last year. Use was also reduced to 1.349 billion from 1.351 last month, raising carryover to 228.1 million tonnes from 227.9. USDA also raised its world oilseed production estimate to 576.6 million tonnes from last month's 573.9 and '17-18 world carryover to 109.0 million tonnes vs 104.5 last month and 108.4 last year. The USDA report was a shocker even to those whose pre-report expectations were at the high end for yield, production and carryover. The figures were the season's first to be survey-based but yield estimates did not accord with signals from USDA weekly crop condition ratings. Futures losses were huge. USDA just set new and lower baselines for 2017-18 prices. The main thing the market watches is carryover and USDA numbers were 25 million bu above trade ideas for wheat, 75 million above for soybean and 275 million above for corn. Its global estimates were as bearish as US domestic. World wheat carryover is another record. As usual, trade probably over-reacted today but there is little possibility that prices will return to pre-report ranges and harvest lows are ahead. (08/10/2017)


The only thing preventing a historic drought disaster in Saskatchewan and Alberta is the saturation of subsoil moisture with which the 2017 growing season started. Earlier-seeded fields which germinated before mid-June were able to develop root systems that accessed deeper moisture as the rains tapered off or stopped. Late fields seeded into dry soil have shallow root systems and account for most of western acreage that is in poor shape. Accumulated rainfall maps show that the southwest quarter of Saskatchewan and the adjoining part of Alberta received just 20 to 30% of normal precipitation since April 1. Some districts saw literally no measurable rain. The part of Saskatchewan bounded by Watrous, Leader and Estevan. and as far west as between Lethbridge and Calgary, is in serious drought. It is an extension of the extreme drought belt in North Dakota and Montana. The remaining part of Saskatchewan and Alberta south of an east-west line through Saskatoon, and also the southwest of Manitoba, had highly variable and below-average rain but small-er moisture deficits of several inches. There was little or no rain in this region during July. The heaviest accumulation in the province since April 1 was around Kelvington at 8.6 inches.

To the north of the Saskatoon line moisture conditions are closer to average. Until a few weeks ago the northeast and northwest of Saskatchewan and northeast Alberta had districts with excess moisture. Province-wide as of the third week of July, provincial crop reports had topsoil moisture in Alberta at 33% poor or fair, 34% good, 4% excellent and 9% excessive and in Saskatchewan 32% adequate, 43% short and 22% very short. A year ago topsoil moisture was 15% surplus, 80% adequate and 5% short in Saskatchewan and 85% good or excellent in Alberta. Manitoba, except for the southwest, roughly south and west of Virden, has much more promising conditions and every possibility of five-year-average yields or better. Rain has been more consistent and a rain system last week probably provided all the moisture crops will need to maturity. However this favored area is only 5 to 6% of total crop acreage in western Canada.. (07/31/2017)


Federal and provincial agriculture ministers agreed, with no evident controversy at a meeting the week before last at St John's, on the basics of the next five-year farm policy framework. The federal-provincial policy is little changed, except for the risk management programs which are significantly weakened for many farmers. No changes will be made in crop insurance. The framework has been renamed from Growing Forward to the Canadian Agricultural Partnership (CAP), though the silly names for individual components (Agri-Stability, AgriInsurance, AgriInvesrt, etc) remain. The current scheme expires next March 31. The new program anticipates the same $3-billion annual funding. Government support for research, market development and trade, environmental issues and climate change and value-added processing is unchanged. The ministers agreed to a review of risk management programs over the next year, but did not wait for the results to make substantial cuts that will take effect for the 2018 program year. The original version of AgriStability in 2009, the only national income support program for farmers, had a stepped payout formula in which the first 15% of a shortfall in a year's margin compared to the farm's five-year average did not receive payment, the second 15% received 70% and the remainder 80%. Compensation for negative margin was 60%. Changes in 2012 increased the unpaid margin shortfall to 30% and paid a flat 70% of the remainder, greatly reducing the value of the program to most farmers. This scheme is retained for 2018-22. However funding is not being increased, so maximum allowable net sales per account will be reduced from $1.5 million to $1 million. (07/31/2017)


Except for getting really, really lucky in the stock market, there is hardly a quicker way to accumulate wealth than to own a Canadian farm. Statistics Canada issued its annual national farm balance sheet last month, showing strongly established trends remain intact: the value of farm assets continues its steady advance, liabilities are almost too low and equity keeps appreciating far faster than the inflation rate. As of last December 31 total farm assets in Canada were valued at $591.2 billion, up 5.0% from a year earlier and 36.5% higher than five years ago. Land, not including buildings, was valued at $403.3 billion or 68.2% of all assets, a gain of 7.3% for the year and 51.5% over five years. Total liabilities of farmers were $90.8 billion, up 7.5% and 34.3%. Equity increased 4.5% during 2016 to $500.3 billion, 84.6% of assets. The best-looking farm balance sheet is in Alberta, where farm asset value is the highest of any province ($162 billion) and rose fastest in 2016 (6.9%). Alberta farmers have the highest ratio of equity to assets at 87.3%. The three prairie provinces contain 53.0% of Canadian farm assets, 55.0% of land value and 54.2% of owners' equity. After land, the biggest farm asset class is equipment, followed by marketing board quota. On December 31 Statistics Canada valued equipment on farms at $48.2 billion, a one-year increase of 3.4% but a five-year gain of only 15.9%. Although estimates of equipment value are the least likely to be accurate, the trend aligns with the idea that larger farms invest less per acre in equipment than medium-sized or small farms as they grow. Rising farm equipment prices, largely because of technological and design improvements, would otherwise cause a faster rise in the value of equipment.The slowest-appreciating farm asset is supply management quota, which was valued at the end of last year at $35.1 billion, up 2.0% for 2016 and 8.3% over the last five years. This is also the asset class at the highest risk. Close to 80% of all quota is dairy quota and in a matter of months a melt-down of dairy supply management could begin if the system does not emerge intact from the NAFTA renegotiation. (07/07/2017)


The US agriculture department's seeded acreage and grain stocks reports issued June 30 contained hardly anything not anticipated long before, but triggered the sharpest futures market rally in three years. The acreage report put all wheat area for 2017 at 45.7 million acres, down 9% from the prior year and the lowest since USDA records began in 1919. Winter wheat area was 9% lower at 32.8 million acres of which 25.7 million are expected to be harvested, compared to 36.1 and 30.2 million in 2016. Non-durum red spring wheat was reported at 10.3 million, down 6% from last year, and durum at 1.92 million, down 20%. Soybean area was placed at 89.5 million acres, up 7% from 2016 and very similar to the March planting intentions report. Corn area of 90.9 million acres was 3% under last year but higher than most trade estimates, Of the 890,000 acres by which corn area exceeded March planting intentions, 400,000 acres were in drought-stricken North Dakota. Soybean area did not exceed corn, as was widely expected. US barley acreage was 2.38 million, down 22%, and oats acreage at 2.34 million, down 17%, oat area expected to be harvested for grain was put at 880,000 acres vs 981,000 last year. USDA reported larger than expected grain stocks as of June 1 with soybeans up 11% from a year ago at 963 million bushels, all wheat up 21% to 1.18 billion and corn up 11% at 5.23 billion. Stocks on farms were of interest because of ideas that farmers are holding large amounts of crops off markets for higher prices. This was partly confirmed with on-farm corn stocks up 15% at 2.84 billion bushels and soybeans at 332 million up 18%, but wheat (except durum) of 174 million bushels was off 9%. Durum on farms was 18 million bushels, up 50%. (07/07/2017)


Shipments of western grain by self-loaded producers cars in the 2016-17 crop year will barely reach 300,000 tonnes, or about 3,500 cars. Total movement will be roughly 51 million tonnes, so that producer car shipments will be virtually too small to measure. Producer car use has been in a precipitous decline for some years. The recent high was in the 2012-13 crop year at 1.61 million tonnes. The last year over a million was 2013-14 (1.37 million), dropping by almost half the next year to 772,000 tonnes. In 2015-16 it was 390,000 tonnes. Producer car movements are the least efficient use of railway resources. Cars have to be spotted and picked up one or a few at a time usually from very low volume locations. Any saving that could accrue to actual shippers of producer cars are paid for by all other shippers through railway costs which become entrenched in grain rail rates generally. The right to load them is enshrined in the Canada Grain Act, dating from century ago, originating as an alternative to deliveries to elevators when rates charged by grain companies were often considered excessive. That right was preserved in the numerous revisions to the Act ever since and no one would dare suggest that it be withdrawn. The producer car alternative was heavily promoted by the now-extinct Canadian Wheat Board, in line with its policy of cutting grain firms out of every possible part of the handling process. The Board made it as easy as possible to use producer cars and it is probable that it knowingly incurred and buried extra costs in doing so. The appeal of producer cars has dimmed because the service provided by the elevator system has improved and the price advantage has narrowed. Faced with the choice of an effortless on-farm pick-up of grain by a grain company's trucker and the arduous task of filling a rail car with farm-type equipment in a great hurry, on short notice, at unpredictable times, in any kind of weather, fewer farmers care to subject themselves to the latter. (07/07/2017)


Statistics Canada's seeded acreage report on June 29 held a surprise, and it wasn't so much record area seeded to canola. It was the 33% gain in soybean area, including tripling in Saskatchewan, to make beans the third-largest Canadian crop by planted area. It was the biggest year-to-year change in area of any major crop in modern times. In the March acreage intentions survey farmers said they would plant 6.96 million. In Saskatchewan planted area increased by 354% to 850,000 acres from 2016 compared to 730,000 intended. Gains were 40% in Manitoba, 13.5% in Ontario and 22.5% in Quebec. At 850,000 acres, Saskatchewan suddenly becomes the No 3 soybean province in Canada after Quebec and Manitoba is No 4. This is a major shift in the Canadian crop landscape. Larger soybean area did not come out of canola this year but could do so in the future. Area of canola also set a new record at 22.84 million acres, a 12% gain over last year and 10.5% above 2015. Canola area exceeded all wheat for the first time, making it the leading Canadian crop by area was well as value. The biggest gain proportionally was in Alberta at 16.5% to 6.9 million acres, however acreage declined by 1% in Manitoba to 3.1 million, where there was a big swing away from small grains to corn and soybeans. Crops that declined in area were wheat, lentils and barley. All Canadian wheat area was down 3.7% from 2016 to 22.36 million acres, the smallest since 2011. Durum area dropped 16% from last year's record to 5.21 million acres, also 10% below 5.82 million in 2015. However spring wheat area increased 2.5% to 15.79 million. Wheat area in Saskatchewan dropped 7% from 2016 to 11.3 million acres, including an 18% drop in durum to 4.1 million. Barley and oats, once the mainstays of prairie crop farming, continued a long-tern decline towards minor-crop status. Area seeded to barley was 10% lower than in 2016 and 12% lower than in 2015 at 5.77 million acres. Acreage of oats increased 14% over 2016 to 3.22 million acres, however 2016 set a modern-day low and the 2017 figure is 4% smaller than 2015. Area of lentils was 25% smaller (26% smaller in Saskatchewan) at 4.41 million acres after the spike in 2016 to 5.86 million. Area of peas was reported at 4.09 million acres, down 3.5% from the record of 4.24 million last year, however it was the second-largest-ever for the crop. (07/03/2017)


Spring wheat futures prices in Minneapolis tore through the $7-a-bushel barrier for the new-crop September contract on June 28 with a near-limit one-day gain, capping a rally mostly unbroken for 40 days. It was the highest price for a nearby Minneapolis contract in over three years. Life of contract highs were posted every trading day last week. During June the September Minneapolis future gained $1.31 a bushel (22.5%), Chicago soft red winter 32 cents and Kansas City hard red winter 33 cents (7%). Minneapolis Grain Exchange trading volume and open interest set several new records during June. Premiums for Minneapolis wheat futures over Chicago soft red winter and Kansas hard red winter were almost record-wide, at $2.38 and $2.31 a bushel on June 28. The record was over $3 a bushel over Chicago in 2011, also a drought year. The futures market outran cash prices, which gained only about $1 a bushel during June. Nothing can happen to save the US hard red spring wheat crop now. Spring wheat area is expected to be 11.21 million acres, down from 11.31 million in the March planting intentions report. Harvested acreage may be smaller still due to the drought. Yields will be below 40 bushels per acre and production may not reach 350 million bushels. (07/07/2017)


The US agriculture department made no significant changes in its monthly supply demand report for June. Figures for US wheat were unchanged from May with production at 1.820 billion bushels vs 2.310 billion last year. Exports for '17-18 were held at 1.000 billion, though carryover was raised to 924 million bushels from 914 last month (1.161 last year). US winter wheat production was estimated Kansas hard red winter yield was estimated at 44.0 bushels per acre vs 42.0. Corn production was estimated at 14.060 billion, same as last month and down from 15.150 last year; carryover was unchanged at 2.110 billion vs 2.230 last year. The soybean harvest estimate was held at 4.250 billion vs 4.310 billion last year. US soybean exports were projected at 2.150 billion vs 2.050 last year. Soybean carryover at the end of 2017-18 was raised to 495 million bushels from 480 last month and 450 last year.

USDA estimates global wheat production in 2017-18 were raised from 737.8 million tonnes last month to 739.5 million, just 2% under 754.1 last year. Wheat use was put at 734.7 mmt vs 734.8 last month and 740.2 last year. Global carryover was raised to 261.1 million from 258.2 last month and 256.4 in 2016-17. The world coarse grain crop was put at 1.310 billion tonnes vs 1.312 last month and 1.360 last year. Coarse grain use was estimated at 1.350 billion tonnes vs 1.349 last year, with carryover dropping to 221 million from 221.3 last month and 260.1 last year. USDA raised its world oilseed production figure to 573 million tonnes from 572 in May and 570 in 2016-17. Oilseed carryover at the end of 2017-18 is expected to increased to 103.5 mmillion tonnes from 100.7 last month but slightly below 104.2 last year.

USDA will update US crop production in the next monthly report due July 12 based on the June 30 planted acreage report. Today's figures were not so much a signal that nothing has changed as that USDA's reporting procedure does not usually adjust area or yield in the June report, and there were no strong demand indicators. (06/09/2017)


The Trudeau government's transportation policy overhaul bill which finally made its appearance in the House of Commons last week. While the actual mechanics will have to await the regulations, the government has accepted the principle, more fully than ever before, that the railways do not compete for business and must be forced by heavy regulation to treat their customers fairly. The parts that pertain to rail transportation are almost all relevant to the grain haul. The bill contains practically no trace of any recommendation from the Emerson review of the Canadian Transportation Act of 2015. The bill (the short title of which is the Transportation Modernization Act) retains the revenue cap on railway grain charges (Maximum Revenue Entitlement or MRE) with a modification that will consider grain-related capital investment by each railway. The more a railway invests the higher its MRE. The cap was first imposed in 2000 and has been strenuously resisted by both railways ever since. The Emerson transport review in 2015 had recommended it be phased out over seven years and the railways lobbied hard for that measure to be adopted. Shippers will be able to demand service contracts containing provision for reciprocal payments for damages incurred by either party because of actions of the other. Shippers will be able to seek financial compensation in cases where railways fail to meet the terms of service agreements, matching demurrage charges that the railways now apply if cars are not loaded within a prescribed time. Both shippers and carriers will be able to refer disputes to final offer arbitration by the Canadian Transportation Agency, up to a maximum award of $2 million. Arbitrated settlements will be effective for a period requested by the shipper of up to two years. A more exact definition of 'adequate and suitable' rail service will be created as the basis for adjudicating shipper complaints about inadequate service, and the time period within which the CTA must render decisions on complaints will be shortened. The bill provides for extension of interswitching rights to as far as 1,200 km under certain conditions, throughout the country. The CTA will set rates for interswitch traffic annually. The proposals will presumably be better explained in regulations, which could be complex, but the proposal is a radical departure from past interswitching policy. The status of the current 160 km radius is unclear because it is contained in the Fair Rail for Farmers Act, which expires August 1 unless extended. There is no mention of the Fair Rail law in Bill C-49. If not extended, the interswitching radius reverts to 30 km until C-49 is proclaimed. Minimum requirements for weekly grain movement which could be applied under the Fair Rail act are dropped. (05/22/2017)


Some progress was reported last week in the standoff with India on the fumigation of Canadian pulse crops, but information was very sketchy and unofficial. It was hard to say whether a resolution is nearer or if it is more wishful thinking, as the June 30 deadline for the current fumigation exemption approaches. Earlier this month India's phytosanitary authority issued amendments to its plant quarantine regulations accepting phosphine gas as an alternative fumigant for pulse crop cargoes. The practical difference between phosphine and methyl bromide is that phosphine is not prohibited as a greenhouse gas pollutant. It is approved in Canada for various uses including raw agricultural products, feed and processed foods. Several companies offer fumigation services at Vancouver and Prince Rupert for bulk cargoes, containers and in-transit. Obviously there is an issue of cost. It is cheaper to fumigate in India. Canada's preferred solution still seems to be the so-called 'systems approach', possibly for a two-year trial period during which the Indian government would closely monitor its effectiveness. The 'systems approach' does not rely on chemicals, but on good handling and storage practices to prevent infestations or control them by natural means such as sub-zero Canadian winters. Pulse crop cargoes would be certified free of insects without fumigation by the Canadian Food Inspection Agency. However there is no experience to show that such certification would be reliable and no information on what would happen if were found in certified shipments. Temperatures under minus 15C kill insects in a few days, but for most of the year even on the prairies extreme cold is not a usable part of the 'system'. The real problem is India's zero tolerance of any contamination, a policy that it obviously will not change. The best outcome is for fumigation of Canadian pulse cargoes on arrival to be continued indefinitely. (05/22/2017)


Statistics Canada has released the first figures from the 2016 farm census, revealing that the long-running trend to farm consolidation seems to have slowed. The number of census farms was reported at 193,492 nationally, a 6% decline from the last count in 2011. It was the smallest five-year drop in 20 years. Between 2006 and 2011 farm numbers shrank by 10% and between 2001 and 2006 by 8%. The number of farms fell by 12,238 in the latest five years, by 23,640 in the five years prior and by 17,550 in the half-decade before that. The total number of farms in western Canada declined by 7.1% over five years to 102,530, a faster rate than in eastern Canada or nationally. To Statistics Canada a farm is any holding that produces any one of a long list of crops and livestock. The majority of census farms are not farms at all in the practical sense, as businesses that can provide a competitive family income to the owners. The census has 11 size categories topping out at 3,520 acres and over, which is more or less the starting point for a commercial farm in western Canada today. Seven of the size groups are below 400 acres. The number of farms under that size was 121,501 in 2016 or 62% of census farms, compared to 128,299 or 63% five years earlier. Statistics for farms by gross revenue are another measure. The latest census showed 56% or 109,239 farms with gross annual revenue of less than $100,000 and 85,229 under $50,000. The number of actual commercial farms in Canada therefore appears to be between 35,000 and 45,000. The threshold size varies with the type of agriculture. Some farms (say poultry) require little land. But in the west a commercial scale crop or cattle farm can be taken as above 2,000 acres. Statistics Canada's size classification are converted from hectares, so the closest tier is 2,240 acres. The number of farms of this size or larger increased by only 209 units on the prairies in the five years to 2016, to represent 18.0% of all farms compared to 16.6% in 2011. This can be considered a shockingly small number, but these farms are responsible for the large majority of farm production. The average size of all census farms in Canada increased to 820 acres in 2016 from 779 acres in 2011. Total area in farms decreased by 0.9% from 160.2 million acres in 2011 to 158.7 million in 2016. However area dedicated to crops rose to 93.4 million acres in 2016 from 87.4 million. The figure is misleading because some land happened to be flooded during the 2011 census survey and was not counted as crop area in that year. The rest of the gain is attributed to conversion of pasture to crops and reduced summerfallow. (05/15/2017)


Statistics Canada reported March 31 grain stocks on May 5, confirming the extremely tight old-crop canola supply, especially stocks on farms, though a larger inventory of most other crops compared to a year earlier. The total of stocks of the seven major grains plus lentils were 5% larger than on the 2016 date and stocks on farms were also 5% higher mainly due to larger wheat, durum and pulse crop supplies. Keenest attention is on the canola supply, which was reported at 6.57 million tones, down 23%. Farm stocks at 4.99 million tonnes were 28% smaller and commercial stocks were also lower. Between March 31 and April 24 farm deliveries of canola were 1.60 million tonnes so that currently farm stocks are about 3.39 million, assuming reasonable accuracy of the report. Weekly farm deliveries in 2016-17 to date averaged 385,000 tonnes. With 14 weeks remaining in the crop year and at least 19 weeks before new-crop seed starts to become available, deliveries for the rest of the crop year cannot average more than about 175,000 tonnes a week. If farmers included some canola still to be harvested in their responses to the Statistics Canada survey, stocks may be even tighter. Exports, domestic crush or both will have to decline. Otherwise grain stocks are more than adequate to maintain year-to-date exports and still leave plenty of carryover. The slower rate of wheat exports is reflected in the farm supply. Durum wheat stocks on farms were reported 69% higher than a a year ago, though much of the supply is below milling quality and not representative of usable durum. Stocks of peas and lentils were also higher at the farm level reflecting record 2016 production. (05/08/2017)


Grain trade between Canada and the US is a very one-way street. During the 2016-17 crop year the US is expected (by USDA) to import 3.1 million tonnes of Canadian wheat (including 1.3 million of hard red spring and 900,000 of durum) 1.5 million of oats, 325,000 of barley, 1.2 million of corn and 600,000 tonnes of soybeans. The US is the second, third or fourth-largest importer of several Canadian crops. Canadian imports of US grain are negligible if not zero. American millers and horsefolk cannot do without Canadian (or else Scandinavian) oats because domestic production does not meet demand. But in the case of all other crops, the US imports them from Canada while struggling with its own unmanageable, price-crushing surpluses. Imports occur because Canadian grains are often cheaper or more accessible and there are no regulatory obstacles. Canadian grain flows south as easily as American grain moves east and west. The device preventing American imports is the statutory grading system. The situation is massively one-sided. American grain is not treated equally with Canadian grain in Canada and the most fundamental tenet of free trade is blatantly violated. Canadian wheat and other grains are received by US buyers exactly as US grain is received, graded according to US specifications. Once it enters the American handling system it is treated identically with American grain. It is not segregated or identity preserved and is freely commingled with all other grain. Canadian wheat can receive an official USDA grade certificate and is eligible for export as US origin. The same is true of commercial sales into the US by Canadian grain companies. American grain in Canada is treated like foreign matter under the statutory grading system. Only grain grown in Canada may receive an official Canadian grade certificate, in one of a dazzling number of categories and grades. American grain can receive a grade certificate only of the lowest statutory grade for its class. For wheat the grades are feed wheat and No 5 Amber Durum, regardless of quality. The Canadian system is so rigid that even screenings from US grain cleaned in Canada must be handled and disposed of in accordance with a Canadian Food Inspection Agency directive. The bottom line is that non-Canadian grain can never be afforded equal treatment with Canadian grain as long as the statutory grading system exists. It is increasingly ignored in actual export business, especially for wheat. Imagine that all the cars on the road have four wheels but Canada has a regulation requiring five wheels. Eliminating it is in the interest of western grain growers, the grain trade and exporters and importers. However it also has its supporters, like the single-desk selling system had (substantially the same people). The internal momentum to kill it will be slow to build. It is a stretch that reform could be forced from the outside by the new NAFTA, but stranger things have happened. (05/08/2017)


There is no safer assumption than this: if western canola growers could have increased 2017 acreage even more they would have. Canola has had an amazing run as a revenue producer on farms. Growers may object to high input costs, especially seed, but when they run the numbers it is the hands-down winner. Farmers are seeding all the canola they dare, if not more. Canola has hit the rotation wall in which growing it too often on the same land attracts unmanageable disease and insect attacks. Years of too-tight rotations have created such concentrations of soil-borne diseases that they cannot now be eradicated. Higher production (or possibly even just maintaining it) depends on higher yields, which in turn depend on the development of varieties that are more resistant to the major diseases, including clubroot. A 10-year yield history for canola, shows a very irregular trend and great sensitivity to variations in growing season conditions, which include disease and insect pressure. Canola yield in western Canada averaged 27.0 bushels per acre in 2007 and 42.3 in 2016 while wheat averaged 33.6 and 52.0, 57% and 55% higher. But the average for the first five-year period of 2007-16 was 32.9 and 39.9 bushels for canola and wheat compared to 37.1 and 47.2 in the second. The gain was 13% for canola and 18% for wheat, which does not have the benefit of genetic modification. Canola is a difficult crop to grow, which explains why it is not grown in many parts of the world that are at least as well adapted as western Canada.. (05/01/2017)

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