Moisture conditions improve across western Canada but dry pockets remain

The Canadian Wheat Board (CWB) today projected a western Canadian wheat and durum crop of 22.1 million tonnes for the 2004-05 crop year, up slightly from 21.1 million tonnes in 2003-04. The projection for the 2004-05 barley crop is 11.9 million tonnes, up from 11.4 million tonnes in 2003-04.

"Recent rainfall has improved crop production prospects across most of Western Canada," said Bruce Burnett, Director of Weather and Crop Surveillance, speaking at the CWB's annual weather and crop conditions industry briefing. "However, poor subsoil moisture levels in northern and central areas of Saskatchewan continue to cause concern."

In parts of eastern Manitoba, Burnett noted, the problem has been too much precipitation, which has put crop production in the area at risk. "Overall, crop development has been slowed down by cooler temperatures throughout most of May," he said, adding temperatures during the month were two to four degrees Celsius below normal across the Prairies.

At the briefing, the CWB's weather and crop surveillance experts Burnett, David Przednowek and Guy Ash also provided an overview of the international situation. Production is expected to recover in Europe, Russia and the Ukraine, where winterkill followed by drought and excessive heat caused significant problems in 2003. Wheat and durum production is projected to drop in the United States, with the winter wheat crop in the Southern Plains experiencing significant stress caused by excessive heat and drought. The lingering effects of three consecutive years of drought are still present in parts of Montana and South Dakota.

Among major importers of western Canadian grains, production of wheat in China is expected to decline further this year as the planted area continues to fall. North Africa, which is an important market for western Canadian durum, is expecting another bumper crop after a second consecutive year of timely rainfall. However, recent rains in North Africa and southern Europe have caused some degradation of the quality of the durum crop.

Overall, the CWB is projecting world wheat production levels to increase from 551 million tonnes in 2003-04 to 589 million tonnes in 2004-05, over five million tonnes short of projected global consumption.

The complete weather and crop prospects summary is attached. A Web cast of the weather and crop conditions briefing is also available on the CWB Web site, www.cwb.ca.

Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada's biggest exporters, the Winnipeg-based organization sells grain to more than 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.

CWB Industry Briefing
June 10, 2004

Western Canada

Recent rainfall has improved prospects for crop production across Western Canada, but poor subsoil moisture levels in northern and central areas of Alberta and Saskatchewan continue to be a serious threat to 2004 production. Excess moisture is also a concern in parts of the eastern Prairies, as heavy rains during May resulted in saturated soils and slowed planting progress. Although severe drought conditions are not expected in Western Canada this year, crop production risks are elevated as a result of the poor soil moisture levels. There is also an increased potential for insect damage to crops this year, a legacy of the past three years of drought.

Soil moisture levels in Western Canada were depleted by dry weather during the second half of 2003 as well as poor winter precipitation. Soil moisture levels at the beginning of April were quite poor with most of Saskatchewan and Alberta reporting soil moisture reserves markedly below last year. The only area of the Prairies reporting good soil moisture levels was central and eastern Manitoba. Precipitation since the beginning of April has been below normal in west-central Saskatchewan and eastern Alberta, which places crop production regions at significant risk for the 2004 growing season. Despite the below normal precipitation, amounts have been adequate for germination of the crop. The Peace River region and parts of the northern grainbelt in Saskatchewan and Alberta have also received slightly below normal rainfall. Rains in these regions have been adequate for germination and early crop growth, but soil moisture reserves remain low. The southern and eastern areas of the Prairies have reported above normal precipitation during the spring period, with amounts in south-central Saskatchewan and southern Manitoba approaching twice the long-term average.

Planting progress has been ahead of normal through most of the 2004 planting season, but recent delays have slowed the planting of the last eight per cent of the crop. Planting progress this spring has been quite variable, with progress in central and northern Saskatchewan and Alberta ahead of normal, and delayed progress in southern Saskatchewan and Manitoba due to excessive precipitation during the second half of May. The overall planting pace in Western Canada was ahead of normal (two to five days) during May, but has dropped behind normal in June. As of June 7, 2004, 92 per cent of the crop was seeded, with the bulk of the planting left in south-eastern Saskatchewan and southern Manitoba.

Cooler than normal temperatures during May are also causing concerns as crop development has been slowed by the cool weather. Temperatures were 2 to 4 degrees Celsius below normal across the Prairies, with the coolest readings reported in the east. The cool weather has delayed the emergence and early growth of the crop. Crop development in Alberta is generally one to two weeks ahead of development in Saskatchewan and Manitoba. One benefit of the cooler weather has been delayed hatching of grasshopper eggs. Significant problems with grasshoppers are still anticipated across most of the Prairies once warmer weather arrives.

The seeded area estimates, comparisons to last year and the March Intentions of Principal Field Crops Areas released by Statistics Canada are contained in Table A. Switching of durum acreage to alternate crops in southern Saskatchewan is expected to be significant this year, as planting delays have pushed seeding late into the season. Spring wheat and barley areas are expected to increase slightly. Canola area is expected to remain unchanged from the Statistics Canada report, as decreases in Manitoba are offset by increases in Saskatchewan and Alberta.

Table B shows the yields and resulting production using a weather based risk model developed by the CWB. For wheat, the weather model indicates yields will most likely fall within the range of 28.9 and 36.4 bushels per acre, with the most probable yield being 33.3 bushels per acre as of June 10.

Looking at production based on these modeled yields (Table B), total wheat production for Western Canada is expected to increase to 22.1 million tonnes from 21.1 million tonnes in 2003, with durum production rising to 4.7 million tonnes. Barley production is expected to increase slightly from 11.4 million tonnes in 2003 to 11.9 million tonnes.

World Outlook

A recovery in world wheat production is expected in 2004 as crops in Europe, Russia and the Ukraine rebound from the poor crops of 2003. Production prospects in the U.S. have decreased from last year, with the winter wheat crop in the Southern Plains experiencing severe stress during the growing season. Soil moisture conditions in the U.S. spring wheat, barley and durum regions have improved over the past month, but lingering effects of drought are still present in parts of Montana and southwestern South Dakota. Corn planting is nearing completion in the U.S., although soybean planting progress has been slowed by heavy rains during the last half of May.

Crop conditions in Europe, Ukraine and southern Russia have improved from last year due to a mild winter and timely rainfall this spring. Production of wheat in China is expected to decline this year as the area planted to the crop continues to fall. A second consecutive year of timely rainfall has kept durum, wheat and barley production at near record levels in North Africa. Recent rains in North Africa and southern Europe have caused some degradation to crop quality as harvest is getting underway.

Table A
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                               Western Canada
                                  sown area
                               (million acres)
                             ------------------------------------------
                              Statistics Canada             CWB
                             ------------------------------------------
                                March
                             Intentions    2003       2004     % Change
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    All Wheat                   24.65      24.98      24.74      -1.0%
      Durum                      6.03       6.14       5.79      -5.6%
    Oats                         4.63       5.19       4.72      -9.0%
    Barley                      10.96      11.72      11.07      -5.5%
    Rye                          0.41       0.36       0.41      15.5%
    Flax                         1.93       1.84       2.00       8.7%
    Canola                      12.67      11.63      12.62       8.6%
    Six Grains and Oilseeds     55.25      55.70      55.56      -0.2%
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    Table B
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                             Western Canada
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                                           Yield
                                          (bu/ac)
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                               10th         50th         90th
                            Percentile   Percentile   Percentile
    -------------------------------------------------------------------
    All Wheat                  28.9         33.3         36.4
    Durum                      25.6         30.3         34.2
    Oats                       59.2         62.7         65.9
    Barley                     48.9         53.7         57.7
    Rye                        27.3         31.4         34.3
    Flax                       18.2         20.9         22.9
    Canola                     22.3         24.6         26.4
    Six Grains and Oilseeds
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                                 Western Canada
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                                                Production
                                             (million tonnes)
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                               2003         10th         50th         90th
                            Percentile   Percentile   Percentile   Percentile
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    All Wheat                  21.1         19.2         22.1         24.2
      Durum                     4.3          4.0          4.7          5.3
    Oats                        3.3          3.2          3.4          3.6
    Barley                     11.4         10.8         11.9         12.8
    Rye                         0.3          0.3          0.3          0.3
    Flax                        0.8          0.9          1.0          1.1
    Canola                      6.6          6.3          6.9          7.4
    Six Grains and Oilseeds    43.4         40.7         45.6         49.4
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