Source: Agriculture and Agrifood Canada

SUMMARY

Statistics Canada’s (STC) survey of seeding intentions for 2006 indicated a significant increase, from 2005, in
summerfallow, reflecting farmer uncertainty about seeding decisions at the time the survey was taken at the end of March. However, due to good moisture conditions and rising prices for spring wheat and canola over the past two months, Agriculture and Agri-Food Canada (AAFC) has increased the area forecast to be seeded to spring wheat, durum and canola from the STC intentions report. Also, AAFC has decreased the projected area seeded to corn from the STC report due to the removal of the anti-dumping/countervail duties on imports of corn from the US. It is assumed that precipitation will be normal for the growing and harvest periods, and that the abandonment rate and quality will be normal. Trend yields are assumed for both western and eastern Canada, as soil moisture reserves are good in most areas, although there are dry areas in northern Alberta and areas of excessive moisture in Manitoba and Saskatchewan.

The total production of grains and oilseeds in Canada is forecast by AAFC to decline by 6% from 2005-06, to 63
million tonnes (Mt), versus the 10-year average of about 60 Mt. Production is forecast to decline by 6%, to 47.9
Mt, in western Canada and by 5%, to 15.2 Mt, in eastern Canada. Total exports and total domestic use are
expected to increase significantly and be 18% and 11% above the 10-year average, respectively. In general, wheat prices are expected to increase from 2005-06, while durum prices are expected to decrease. Prices for canola, feed barley and corn are expected to strengthen, but prices for soybeans and oats are forecast to decline. Prices will continue to be pressured by the strong Canadian dollar. The market outlook is very tentative due to the high degree of uncertainty regarding global supply and demand conditions. The major factors to watch are: weather and growing conditions in the major producing countries, import demand from China and India, EU export
subsidies, increased demand for biofuel, ocean freight rates and the Canada/US exchange rate.

Full report in PDF format: http://www.seedquest.com/News/releases/2006/pdf/15903.pdf