THURSDAY, APRIL 5, 2012
VOL. 90 | NO. 14 | $3.75
AUSTRALIA’S LESSON | SPECIAL REPORT P28-31
SERVING WESTERN CANADIAN FARM FAMILIES SINCE 1923
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MARKETS | SEEDING INTENTIONS
FEDERAL BUDGET | AGRICULTURE
U.S. report sparks acreage battle
Ag Canada must trim 10 percent in new budget
Crop prices shoot higher | Rally could change seeding plans and cool market
Few details on how $310 million will be cut BY BARRY WILSON
BY SEAN PRATT SASKATOON NEWSROOM
Canola and spring wheat prices shot up in the wake of bullish U.S. seeding intentions and stocks reports but the bounce could be short-lived, according to a Canadian analyst. The grain trade was caught off guard by the U.S. Department of Agriculture’s March 30 Prospective Plantings report. The forecast for 95.9 million acres of corn was above the highest prereport estimate in a Dow Jones Newswires poll of 20 grain industry analysts and the 73.9 million acres of soybeans was below the lowest estimate for that crop. The report instantly bolstered soybean and canola markets. Prices for the nearby May contract shot up 5.3 percent for soybeans and 4.1 percent for canola between the close of markets on March 29 and the opening on April 2. November soybeans and canola
were up 6.4 percent and 4.6 percent respectively over the same time. But growers shouldn’t put too much faith in the report because the survey of 84,500 U.S. farmers was conducted during the first two weeks of March missing the latest soybean rally in response to South America’s diminishing production prospects, said Marlene Boersch, managing partner with Mercantile Consulting Venture. She doesn’t buy that U.S. growers will plant 95.9 million acres of corn, the largest crop since 1937. “We think that number is too high, definitely too high,” said Boersch. “We just think it is a bit overdone on the corn and underdone on the soybeans.” She is forecasting 93 to 94 million acres of corn and up to 77 million acres of soybeans. If that happens soybean and canola prices will likely soften. “Right now we would consider hedging up to 35 percent of the
canola, partly because it covers the variable cost,” said Boersch. Bruce Burnett, the CWB’s director of weather and market analysis, said the fight over acres in the U.S. is far from over. “What the report on (March 30) did was really set the table here for some last minute acreage battle between soybeans and corn to duke it out for the remaining uncommitted acreage out there,” he said. He agreed with Boersch that soybeans will win that war due to stronger prices, but he believes the acreage changes will be marginal and there will still be more than enough corn supply for the 2012-13 marketing campaign. Chuck Penner, analyst with LeftField Commodity Research, said the U.S. report was welcome news for the stalled canola market, pushing old crop canola as high as $630 per tonne. SEE U.S. ACREAGE BATTLE, P. 2
OTTAWA BUREAU
The federal Conservatives are looking at Agriculture Canada to shoulder a larger-than-average share of upcoming spending cuts, similar to what the Liberals did in their 1995 deficit-cutting budget. In his March 29 budget, finance minister Jim Flaherty said Agriculture Canada and its affiliated agencies will have to cut 10 percent from their spending — $310 million — within two years. Details are vague as yet, but cuts of that size could have a wide-ranging effect on government program spending and the number of civil servants available to deal with agricultural issues. Only public safety, national defence and international assistance are being told to take a larger dollar hit. BUDGET CUTS, PAGE 2
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TECHNICAL DIFFICULTIES: Eli Entz, left, and Isaac Waldner work on a tilt adjuster that broke while Waldner was cultivating a MacMillan Colony field west of Cayley, Alta. They took the part back to the colony to weld it, then resumed discing half an hour later. | MIKE STURK PHOTO
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APRIL 5, 2012 Return undeliverable Canadian addresses to: Box 2500, Saskatoon, SK. S7K 2C4