Weaker prices and dry conditions leave canola vulnerable to losing acres

(Paige Holmquist/RealAgriculture)

The weakest prices in over three years, combined with prospects of another drought, are expected to put a dent in canola acres as cropping decisions for 2024 are finalized.

Unfortunately for those on the selling side, grain and oilseed markets have been posting losses like the Ottawa Senators or Columbus Blue Jackets rather than Jonathon Driedger’s high-flying hometown Winnipeg Jets.

While the entire oilseed complex has been trending lower for the last 18 months, canola futures have dropped to their lowest level since late 2020.

“I think we’re going to see canola down a little bit, maybe three or four per cent, give or take. We were just over 22 million last year, and we think we’ll be about 21 and a half,” says Driedger, analyst with Leftfield Commodity Research, discussing 2024 acreage expectations in the interview below.

“I would say that canola is vulnerable to maybe bleeding some acres around the margins. A lot of these decisions are probably already more or less etched in stone on a lot of farms, but if it’s dry, canola is not a cheap crop to grow,” he says. “I think there’s just a real negative sentiment around the crop right now, one could argue that’s too pessimistic, but either way, values have been bleeding lower.”

Driedger says they also expect spring wheat acres to drop slightly, while comparatively strong markets for crops traditionally grown in dry conditions, such as durum and pulses, are expected to drive higher acres.

Looking ahead, Friday’s supply/demand and grain stocks reports from the USDA could be a big wildcard setting the tone for the next month, he notes. “If we get some negative numbers, the way momentum is trending, it wouldn’t be shocking for us to break through support and test the lower end.”

Check out the discussion about 2024 acreage and market prospects with Leftfield’s Jon Driedger, originally heard on RealAg Radio on Jan. 10:

 

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