The Big Orange Wave: 2011 Planting Delayed, Full Speed Ahead

Big Orange WaveFirst, let’s deal with the guerrilla in the room.  Is the big orange wave coming?  Are the socialist hordes at the door?  Are our Canadian banks about to be nationalized? Are we all ready for Prime Minister Jack Layton?  Or does it really matter?  Political polls are always right and the events of the last few weeks, has seen the NDP go into record poll territory during our federal election campaign.  So on Monday Canadian farmers may wake up with a completely different political landscape.  Prime Minister Jack!

First of all let me say that I’m unequivocally in the camp that it doesn’t matter.  We are all Canadians and that means we have found a way to get along in this country and prosper for the last 147 years and I don’t think that’s going to change Monday.  Whoever comes out ahead is fine with me.

If there is a minority situation I fully expect that Jack Layton will become Prime Minister.  It may not come in the immediate future but I expect that the Conservatives will eventually be defeated in Parliament with the coalition between a large NDP caucus and a small Liberal caucus taking over.  It will all be up to our Gov. Gen.

In the meantime we are dealing with delayed planting across the US and Ontario corn belt.  Throughout my speaking tour this past winter, I cautioned Ontario growers by telling them we could not expect the same benign weather that we saw in 2010.  So far in 2011, I’ve hit that nail right on the head as heavy rain and cold has hindered the spring planting season in Ontario as well as across Canada.  There is about 2000 acres of corn planted in Ontario this year, while last year most of the 1.872 million acres was in the ground by the end of April.  This year that figure will remain at 2000 acres.

What that means is a more normal year with reduced yields.  I’m just talking about the law of averages here.  The same will surely be in the United States where USDA is expecting 92.2 million  acres of corn to be planted with with a trendline yield of 161.7 bushels per acre.  Yes, it may happen but every day that goes by with planters sitting in my opinion means less yield.  Less yield means that corn ending stocks for 2011/12 will invariably move toward 500 million bushels.

Last week Statistics Canada came out with their ” intended areas of principal field crop report” and said that Ontario could expect 2 Million acres of corn to be planted and 2.37 million acres of soybeans.  This represents a 6.7% increase in corn acres and a decrease of 3% in soybean plantings.  I expect Ontario corn to reach 2.1 million acres.  However, with wet weather all over Ontario corn acres may be challenged to bust through the 2 million acre mark as switching to soybeans may surely take place into June.  Fields without tile drainage this spring will surely be challenged.

The same Statistics Canada report calls for a 10% increase in spring wheat acreage in Western Canada, a whopping 60% increase in Durham wheat and a 47% increase in oats.  However with flooding covering much of Manitoba and Saskatchewan I think those numbers are way out of whack and I think we can shave 1 to 3 million acres off Western Canadian statistics Canada estimates.

Of course, those are all interesting statistics but most of us can’t get in the field because of wet weather.   Needless to say, news flash here, that will change, the sun will shine and we will feel it on the back of our necks.  We will get this crop in and pricing it will be very important.  For instance prices doubled for corn between planting last year and this year.  I certainly didn’t predict that.  We’ve still got the same conditions, tight fundamentals, huge noncommercial and managed futures interests in the grains and a long and risky production season ahead of us.  I expect prices to be buoyant at many different junctures over the next 12 months.

There are flies in the ointment.  This past week US Federal Reserve chairman, Ben Bernanke said no to US interest rate hikes.  His news conference was a great watch but essentially when they held the line on interest rates, they crushed the US dollar.  Since then the US dollar has been screaming lower, which generally is a boon to agricultural futures prices.  However this time, for whatever reason at least the last few days futures prices have been heading lower.  That’s not a good sign.

Next week at this time, I expect planters to be rolling.  Who knows, we might even see the big orange wave come to Canada.  It’s full speed ahead no matter what happens.