Yield and production estimates for Saskatchewan Saskatchewan Agriculture and Food is estimating this year’s production of grains, oilseeds and specialty crops at 23.9 million tonnes, a bit below the ten-year average of 24.4. The market will be particularly interested in the yield and production projections for individual crops. The provincial yield of spring wheat at an estimated 29.8 bushels per acre is very close to the ten-year average. Durum yields are pegged at 26.7 bushels per acre, which is three bushels below average. When combined with this year’s low durum acreage, production is going to be way below normal. Most of the oats in the province is grown in eastern areas where moisture isn’t so short. The provincial oat yield is pegged at 65 bushels per acre, which is 6 or 7 bushels above average. The barley yield is predicted to be 49.7, as compared to the average of 48. At 19.9 bushels per acre, flax is almost two bushels above average, but the below normal acres means total flax production will be below normal. Sask Ag’s canola yield comes in at 26.2, compared to the ten-year average of 23.8. There are a lot of canola acres, so production will be big. The same goes for field peas. The expected yield is 31.4, a couple of bushels above average and pea acres are record large. Sask Ag’s yield estimate on mustard is 908 pounds per acre, while canaryseed is at 1,074. Both are well above the ten-year average, which I find a bit surprising. Lentil yields are pegged at 1,046 pounds per acre, just a bit below average. When combined with acres seeded, mustard and lentil production come in below the ten-year average, while canaryseed production is above average. I’m Kevin Hursh.
July 30, 2007
Hot weather should mean hot markets The relentless heat across Western Canada has cut yield potential in many areas and that’s starting to have an effect on the prices of some crops. The Pool Return Outlook for new crop durum has shot up by $39 to $41 a tonne. That’s the biggest one-month increase in a PRO that I can remember. After deducting average freight and handling, the top grades of durum are now forecast to be worth about $6.00 a bushel net to growers. The price premium for durum over spring wheat is expected to be more than a dollar a bushel. One of the factors propelling durum prices higher is rain during harvest in Europe. The other factor is excessive heat and dryness in Western Canada. Western Canadian production is also a big determinant of world price levels for crops like mustard, canaryseed, flaxseed and green lentils. Right now yields are a guessing game. Everyone knows yield potential has dropped. The question is how much. It’s my guess that we’re likely to see significant price increases on a number of commodities as the extent of yield shortfalls are more fully realized. I’m Kevin Hursh.
July 27, 2007
American news A friend of mine is a long distance trucker making regular trips into the U.S. By talking with people in the U.S., reading local newspapers and listening to American news on the radio, he hears a lot of interesting tidbits related to agriculture. Here’s a sampling: -There’s been lots of rain in North Dakota this year and there are concerns about new invasive weeds including yellow toadflax. -Lawmakers are being pressured in many states to come down hard on imported food through Country of Origin Labeling and safety testing largely due to the poor safety and quality record of China. New rules and regulations will also affect Canada. -The U.S. will add $200 billion to its national debt under the 2007 federal budget. By the year 2020, some observers believe the U.S. will have a national debt in the range of $28 trillion. It makes one wonder if a day of reckoning is coming over American debt levels. -A water marketing company in the states planned to move water in railway tank cars from existing wells in northeast Wyoming. The plans were shot down by angry residents of the area. -Now the company plans to drill wells on the railway right of way as means of getting the water it wants. This is more evidence that water will be the gold of the upcoming decades. I’m Kevin Hursh.
July 26, 2007
Hail can be devastating Every year, thousands of prairie farmers suffer hail damage, but it’s still startling to see the damage an intense storm can inflict. A storm hit south of Eston on Tuesday night. Very strong winds, heavy rain and hail. The wind toppled big old trees onto cabins at Eston Regional Riverside Park and it scattered grain bins around the countryside. The rain created big washes in a lot of fields. And where the hail hit, the crop is decimated. In some fields, you can still tell what the crop was. In other fields, it takes a close inspection. Field after field looks like it was silaged. It’s amazing that hail can pound a crop into the ground so badly that the vegetation actually disintegrates. Ravaged canola crops are already emitting a rotten odour. In a matter of a few minutes an entire growing season’s investment can be snuffed out. Last year, August was the worst month for hail claims in Saskatchewan. Here’s hoping that won’t be the case this year. I’m Kevin Hursh.
July 25, 2007
Can Lionel LaBelle make it happen? Gardiner Dam Agri-Energy has started selling shares in its proposed ethanol facility. The plan is for a 95 million litre plant that will need about 9.5 million bushels of wheat each year. The facility would be adjacent to Gardiner Dam Terminal near Strongfield. There are many groups that have been working on ethanol plants a lot longer. However, Gardiner Dam Agri-Energy managed to access federal funding for developing a business strategy and now it has passed the major hurdle of getting final approval for a prospectus. Lionel LaBelle, the charismatic former head of the Saskatchewan Ethanol Development Council joined the effort in April as president and CEO. It was no doubt because of LaBelle’s involvement that the Prime Minister chose Gardiner Dam Terminal as the location for a biofuel media event a few weeks ago. In addition to LaBelle, the local producers involved in the initiative have a proven track record of getting things done. The plan is for the facility to be majority controlled and operated by farmer and community investment. However, it isn’t easy to raise that kind of cash. Potential investors are always advised to read the prospectus, including the risk factors and those are always sobering. A lot of people will be watching to see whether this initiative is successful. I’m Kevin Hursh.
July 24, 2007
Crop ratings slip The best crops in the province are in east central Saskatchewan. The poorest crops are in the southwest. The latest crop report from Saskatchewan Agriculture and Food has crop ratings for each of the main crops in each of the regions of the grain belt. Over the past week, there has been a general deterioration in crop conditions due to the ongoing heat wave. The southwest has been hit the hardest. Only 38 per cent of the spring wheat in the southwest is in the good to excellent category. Forty-five per cent is rated as fair, 15 per cent as poor, and 2 per cent as very poor. The canola rating in the southwest has 50 per cent fair, 15 per cent poor and one per cent very poor. After the southwest, the next poorest canola crops are in the southeast where 32 per cent is fair, and seven per cent is poor or very poor. The best spring wheat and canola is in the east central region. East central spring wheat is rated as 87 per cent good to excellent, with only 13 per cent in the fair category. Eighty-three per cent of east central canola is good to excellent. On a province-wide basis, the crops with the best ratings are sunflowers and fall rye. An amazing 94 per cent of sunflowers are in the good to excellent category, with fall rye at 85 per cent good to excellent across the province. I’m Kevin Hursh.
July 22, 2007
Heat wave perceptions Saskatchewan farmers have some very different views about the hot weather of recent weeks. If you’re in the central or northern grainbelt with lots of soil moisture and a crop that was seeded late, the heat is just what the doctor ordered. The heat is pushing crop maturity and since there’s lots of moisture, crops aren’t suffering. However, if you’re in southern areas and haven’t received any rain recently, day after day of scorching temperatures is hard to take. Part of the difference in perception is the temperature reading. When it’s 27 degrees in Melfort, it’s often 30 degrees in Saskatoon and 34 degrees in Swift Current. All are warm temperatures, but 34 degrees really sucks a lot of moisture from plants especially when it’s accompanied by a hot wind. In the south, while many crops are showing visual signs of burning, the damage is less than I would have expected given the severity of the heat wave. One saving grace has been humidity levels. While higher than normal humidity makes people feel even hotter, for plants it means that moisture isn’t evaporating from leaf surfaces quite as quickly. Combines will soon be rolling on field peas in many parts of the south and it’ll be interesting to see the first yield results of the season. I’m Kevin Hursh.
July 20, 2007
Hursh's crop production estimate For a number of years, I’ve taken a shot at estimating the size of the Saskatchewan crop. My guesstimates have been in advance of the official crop estimates. This year has many parallels to 2006. There was delayed seeding in northeastern areas, but crop conditions overall were very good at the end of June. Then the rainfall tap turned off in most areas with day after day of high temperatures. As in 2006, a lot of yield potential has been lost in southern areas since the beginning of July. The ten-year average for Saskatchewan production is about 24.5 million tonnes of grains, oilseeds and specialty crops. The last crop report of 2006 from Saskatchewan Agriculture and Food pegged provincial production at nearly 25 million tonnes. Crop quality was way above average last year. Although crop ratings continue to decline and although the weather forecast for the days ahead is for more hot dry weather, it’s my guess that this year’s overall production will end up a bit better than 2006. In my opinion, the chance for a record crop is gone, but with a bit of luck provincial production could end up at 26 or 27 million tonnes. I’m Kevin Hursh.
July 19, 2007
A new focus for World Trade talks Whether the World Trade Organization has a snowball’s chance of reaching an agreement is debatable, but efforts are continuing. Crawford Falconer, chairperson of the WTO agriculture negotiations has just circulated a 45-page draft containing formulas for cutting tariffs and trade distorting subsidies. The draft is based on the latest positions of member nations. It’s a complicated document with terms such as modalities, de minimis, blue box, green box, ad valorem equivalents, sensitive products and tariff quotas. The report has drawn predictable responses from Canada’s farm groups. The supply managed sectors say the latest WTO paper threatens the livelihoods of dairy, poultry and egg producers. They want the Canadian government to stand firm and clearly tell its trading partners that it cannot accept the text. The Canadian Agri-Food Trade Alliance has an entirely different view. CAFTA represents the export-oriented sectors of Canadian agriculture. CAFTA says the new document provides a strong foundation for negotiating a successful trade deal that will be a big benefit to Canadian farmers. These opposing views will be on display next week in Geneva with an intensive series of meetings planned to discuss the new report. I’m Kevin Hursh.
July 18, 2007
Who will own the Winnipeg Commodity Exchange? There are competing bids to purchase WCE Holdings, the parent company of the Winnipeg Commodity Exchange. It’s somewhat similar to the bidding war between Saskatchewan Wheat Pool and James Richardson International to purchase Agricore United. IntercontinentalExchange, Inc. (ICE) was acquiring the shares of WCE Holdings for a purchase price of $62.08 per common share, a total of $40 million. In a June 22 news release it was described as a definitive agreement. However, yesterday WCE Holdings announced the receipt of an unsolicited acquisition proposal from a third party to acquire its shares for a purchase price of $77.59 per common share or $50 million in aggregate. The board of directors of WCE Holdings has authorized management to negotiate the unnamed third party’s proposal. WCE Holdings does not intend to disclose further developments until a definitive agreement is reached or negotiations are terminated. That’s a shame. Bidding wars are a great spectator sport. I’m Kevin Hursh.
July 17, 2007
Poor program design for flooding support On Friday, the federal government announced $52 million over the next four years through the Cover Crop Protection Program. It’s extra assistance of $15 per acre to help producers unable to seed due to spring flooding or excessive field moisture. While this sounds like good news, several aspects of the program ring alarm bells. The program starts with 2007, but it’s being targeted only at producers enrolled in crop insurance. It isn’t fair to enhance crop insurance coverage long after the deadline to enroll has passed. Another worrisome part of the program is that payments will be targeted to areas that experienced abnormal levels of unseeded acreage. In other words, only designated areas will be eligible. Drawing lines around coverage areas is always problematic. One rural municipality might be eligible while the next won’t be. Problems like flooding don’t respect arbitrary boundaries and you always end up excluding people who have a valid claim. Yet another questionable aspect of the Cover Crop Protection Program is the money that’s been allocated. For 2005 and 2006, a similar government support program for unseeded acres paid $73 million. The $52 million allocation for four years may not go far if we see continued problems in the years ahead. I’m Kevin Hursh.
July 12, 2007
Big turnaround in durum sales situation Durum producers are able to market all they want to sell this year – a big change from the previous two crop years. Sales opportunities are so good that the Canadian Wheat Board has issued a Guaranteed Delivery Contract for No. 1, 2 and 3 durum. Guaranteed Delivery Contracts have been issued in the past for No. 4 and No. 5 durum, but not for the top grades. With the GDC, producers who have not already committed their durum under a delivery contract have another opportunity to move their grain. The sign-up deadline is July 31 or earlier depending upon CWB sales commitments. Delivery opportunities are available immediately upon sign-up. For this crop year, the CWB has accepted 100 per cent of the durum offered by farmers under delivery contracts. In the previous two years, that was not the case. This led to some problems. Some producers inflated the amount of durum they offered for contract so they could move a greater volume. The CWB implemented a bin audit system to cut down on abuses. In the current situation, some producers may want to hold any uncommitted durum and sell in the new crop year since the new crop Pool Return Outlook for most grades is five to ten dollars a tonne higher. Other producers may want to sell in the current crop year due to cash flow and bin space considerations. I’m Kevin Hursh.
July 11, 2007
Consumer logic can be an oxymoron Agribusiness analysts say one of the keys to success for agriculture is predicting and servicing the emerging food trends of consumers. Unfortunately, consumer trends are sometimes illogical and often divergent. Take for instance the food miles concept – that we should look at how far our food is traveling to understand its ecological footprint. Food miles don’t tell the whole story. Operating a greenhouse during Saskatchewan winters may or may not make sense as compared to importing a product from southern climates. The produce at a farmers market may or may not have consumed more resources than products on the shelf of the supermarket. It all depends how they were produced, how they were transported and how far they traveled. What about organic products that come from thousands of kilometers away? Are they actually healthier or better for the planet than Saskatchewan products produced without all the organic standards? Consumers are an unpredictable lot. Some will rail about the necessity to buy local and organic while others will sit in a line-up at a donut shop drive-thru with their SUV engines running. As farmers trying to capitalize on food trends, we need to accept that the customer is always right even if common sense is all too often lacking. I’m Kevin Hursh.
July 10, 2007
Provincial crop ratings Based on the latest report from Saskatchewan Agriculture, the best crops in the province are in northwestern and west central Saskatchewan. In the West Central region, 94 per cent of the spring wheat, 95 per cent of the barley and 89 per cent of the canola is rated as being in good to excellent condition. The poorest crop ratings in the province are in the northeast. That isn’t a surprise considering the flooding and the difficult seeding conditions this spring. In the northeast, 70 per cent of the spring wheat, 66 per cent of the barley and 66 per cent of the canola is rated as good to excellent. Those aren’t terrible ratings, but there’s a lot more crop in the northeast that’s falling into the fair and poor categories. It’s also interesting to look at how specific crops are doing on a province-wide basis. Most crops are above 80 per cent in the good to excellent categories, with some like fall rye, winter wheat, sunflowers, lentils, peas and canaryseed around 90 per cent good to excellent. The weak crops provincially are triticale with 31 per cent fair to poor, chickpeas with 24 per cent fair to poor and canola with 22 per cent in the fair to poor categories. I’m Kevin Hursh.
July 9, 2007
Score one for the little guys It’s a big victory for smaller grain shippers. On Friday, the Canadian Transportation Agency ruled that CN Rail has failed to fulfill its level of service obligations under the Canada Transportation Act. Great Northern Grain, an inland grain terminal at Nampa in the Peace River region of Alberta spearheaded a major level of service complaint against CN. Grain Northern Grain and its supporters claimed that CN’s policies prevented smaller grain companies and single point shippers from securing enough capacity to function effectively. In its decision, the CTA agrees saying CN breached its statutory obligations to provide Great Northern Grain with adequate and suitable rail service. The Agency found that “in establishing car supply policies that have restrictive terms and conditions like minimum order durations and exclude significant segments of the shipper community, CN unilaterally becomes the arbiter of which of its captive shippers are eligible for a virtual advantage.” The CTA has ordered CN to make a number of changes effective at the beginning of the new crop year. Hopefully, this will benefit all smaller shippers and help to guarantee a competitive grain handling system for the benefit of all producers. I’m Kevin Hursh.
July 6, 2007
Kick some rears It’s great to have the Prime Minister and Agriculture Minister come to rural Saskatchewan and it’s great to see the support being displayed by the federal government for biofuel production. However, Thursday’s media event at Gardiner Dam Terminal near Strongfield with Stephen Harper and Chuck Strahl was poorly orchestrated. The Prime Minister reiterated a commitment already made in the federal budget - $1.5 billion in operating incentives to Canadian producers of renewable fuels. The media in attendance was hungry for details. So were the various ethanol and biodiesel proponent groups. The several hundred people who gathered for the event were polite and supportive but under-whelmed by the lame announcement. Some details on the operating incentives were later posted on the federal agriculture department’s website. For instance, the incentive rate for ethanol is ten cents a litre for the first three years, declining to four cents a litre after seven years. Those are maximum rates and could be decreased somewhat if the industry is profitable. Why weren’t those details available for the media event? A news event requires news. If I were Stephen Harper or Chuck Strahl, I’d be kicking the rear ends of some of the highly paid communication folks they employ. I’m Kevin Hursh.
July 5, 2007
Heat will take a toll of crops The high temperature forecast for Friday could take a lot of bushels out of Saskatchewan crops. A prolonged heat wave like last summer is of course harder on crops. And high temperatures do more harm when crops are under drought stress. In most areas, moisture is currently adequate or surplus, so that will help crops withstand the heat. However, if the temperature exceeds 35 degrees, as predicted for many areas, it will still be bad news. Canola and field pea flowers can abort in the heat. Even with the roots sitting in moisture, plants can’t take up water as fast as they transpire. Hopefully the high temperature on Friday won’t be accompanied by a strong wind that will suck even more moisture out of plants. Thankfully, temperatures are expected to moderate after Friday. Unlike a big hailstorm where the effect is dramatic and measurable, it’s difficult to quantify the effect from one day of searing temperatures. My guess is that extreme temperatures over such a large area could take a significant toll on Saskatchewan’s production. I’m Kevin Hursh.
July 4, 2007
AgriInvest and AgriStability explained Sources close to the negotiations over the new farm programs are shedding some light on how the programs will work. The new producer savings account similar to the old NISA program will be called AgriInvest. A number of months ago, the feds announced $600 million to kick-start this new program. At that time, another $400 million was announced as a cash payout to help producers deal with increasing costs of production. Many producers have received their share of the $400 million in the last few weeks. The $600 million is likely to be placed into AgriInvest this fall and producers will likely have the option of whether to remove this money or leave it in the account. While it’s like the old NISA, AgriInvest will be a scaled down version. Producers will be able to contribute 1.5 per cent of their net eligible sales each year. The feds and provinces will match this 1.5 per cent. NISA was three and three. How payouts from AgriInvest will be triggered and whether there will be caps on the size of individual accounts is yet to be decided. In exchange for AgriInvest, the replacement for CAIS will no longer cover the first 15 per cent of a producer’s margin decline. The CAIS replacement is called AgriStability. Other than the diminished coverage, it will operate much like the most recent version of CAIS. I’m Kevin Hursh.
July 3, 2007
Don't be fooled by the new program names A whole new set of farm program buzzwords have been unleashed. At last week’s meeting of federal, provincial and territorial agriculture ministers the name Growing Forward was applied to the new suite of ag programs coming down the pipeline. Growing Forward will replace the term Agriculture Policy Framework. The new producer savings account similar to the old NISA program will be called AgriInvest. The new margin based income support program will be called AgriStability. The federal government says this will be a replacement for CAIS, but expect AgriStability to be very similar to CAIS. AgriInsurance is the term for production insurance. Federal and provincial governments continue to promise that production insurance will apply beyond crop insurance, but progress has been slow. There’s one more buzzword – AgriRecovery. This is supposed to be rapid assistance to producers for small sized disasters, but there’s no agreement on what will constitute a qualifying disaster. And there’s no agreement on how to cost share AgriRecovery. The provinces want the feds to pay most or all of it, while the feds would like the 60:40 funding arrangement that exists on other farm programs. Even though we have a whole new set of buzzwords, things haven’t changed all that much. I’m Kevin Hursh.
Archives
Kevin Hursh's daily agricultural report is heard Monday through Friday on Swift Current (CKSW), Shaunavon (CJSN), Moose Jaw (CHAB), Estevan (CJSL), Weyburn (CFSL), Rosetown/Kindersley (1330/1210), Lloydminster (CKSA) and Melfort (CJVR).
