2016 Farms.com Risk Management
Ontario Planting Intentions Report
Congratulations to the Winners of the Random Draw Prizes!
As our way of saying thanks for completing the Farms.com Planting Intentions Survey, three survey participants were chosen at random to win cash prizes.
Congratulations to the following cash prize winners!
- $300 - William Chesney, Oxford County
- $200 - George Cornelissen, Lambton County
- $100 - Robert DeBrabandere, Oxford County
2016 Farms.com Risk Management Ontario Planting Intentions Survey Results
According to a recent survey by Farms.com Risk Management, Ontario Farmers are adding to corn acres for the 3rd year in a row as they have continued to enjoy selling corn for $5.00/bushel, considering that a lower CDN $ has more than offset a lower futures price. This is providing further incentive to grow slightly more corn acres in 2016 vs. 2015, by +1.49% or 30,700 more acres. Corn acres are projected to remain above the 8 year average of 1.997 million acres and increase to 2,085,710 or more acres. In fact, Stats Canada in there 2016 Planting Report released on April 21, 2016, is forecasting 95,000 more acres vs. 2015.
According to the Farms.com Risk Management 2016 Ontario Planting Intentions farmer survey conducted from March 1 - March 31, 2016, Ontario farmers are expected to plant 2,730,929 million acres of soybeans, down by -5.83% or 169,701 less acres vs. 2015, but still above the average of 2.585 million acres. Stats Canada, on the other hand, is also forecasting higher soybean acres vs. 2015 but lower than our survey at 2.675 million.
For wheat, 913,835 acres are projected to be planted in 2016 in Ontario (including fall 2015 winter wheat and 2016 spring wheat). This would represent a 14.2% increase in wheat acres vs. 2015. Stats Canada's estimate is even higher at 1.09 million acres. The bottom-line assessment is that 2016 is seeing an increase across the board for corn, soybeans and wheat acres in Ontario.
"A higher CDN $ has more than offset lower U.S. input and nitrogen prices by providing better basis across the board, and therefore overall higher net prices for all crops in 2015 and 2016," says Moe Agostino, Chief Commodity Strategist for Farms.com Risk Management. "A lack of wheat acres in the rotation during the past few years, due to excessive wet weather during the fall planting season, has led Ontario farmers to plant more wheat acres in 2016. The CDN $ bonus program though, is slowly coming to an end as the funds increase their appetite for risk and are putting more money to work buying both commodities and stocks supporting a higher commodity currency the CDN $ more than anyone expected for this time of the year."
We were not surprised with the intentions and results as a higher CDN $ has allowed the Ontario farmer to enjoy selling corn at $5.00/bushel for some time, and in turn, provided support for planting more acres in 2016 vs. 2015.
As always, return, yield and rotation will play a significant role in the final planting decision. The recent rally though, in soybeans futures, of +$1.81/bushel or +21%, in less than 2 months trading, which sent it back above $10.40/bushel, may be leading to some switching acres back to soybeans. Also, soybean demand is much stronger than anticipated, despite very large stocks in the U.S. and a record South American crop. Persistent wet weather in Argentina's second soybean crop and dry weather in Brazil's second corn crop is reducing production by as much as 3 - 10 MMT, a 12-17% reduction. This is making the funds nervous, and in the process, causing futures to jump as we ration some demand.
As the weather planting window opens, many Ontario corn acres could get planted by the end of April if it does not rain. At the end of the day, supply will dictate the fate of basis, long term, to some degree (CDN $ more so), but it will be tough to beat the record corn, at 177, and soybean, at 45, average yields in Ontario from last year, as test weights were off the charts. The wildcard now is weather and the upcoming transition from El Nino to La Nina, which some now estimate to be showing up, at a 50% chance, by August of 2016. This historically brings very dry, warm weather to North American farms.
The acreage estimates in this report are based primarily on surveys conducted during the month of March 2016. The 2016 Farms.com Risk Management Planting Intentions Survey is a probability survey that includes a sample of farmers from across Ontario. This survey used to make acreage estimates is subject to sampling and non-sampling errors that are common to all surveys. Sampling errors represent the variability between estimates that would result if many different samples were surveyed at the same time. Sampling errors for major crops are generally between 1.0 - 3.0% but they cannot be applied directly to the acreage published in this report to determine confidence intervals because the official estimates represent a composite of information from more than a single source.