Canadian farmers will boost canola plantings this year to what could be a record level, lured by the burgeoning biodiesel industry, grain traders and analysts said on Friday, ahead of a key report next week.
Traders said they expect Statistics Canada's planting intentions report, slated for release on Tuesday at 7:30 am CDT (1230 GMT), to also show farmers plan to seed less wheat than last spring, and more barley and oats. "The farmer is just seeing stars in his eyes on canola," a veteran trader said.
On average, traders and analysts surveyed by Reuters said they expected canola plantings to jump 11.5 percent to 14.8 million acres, up from 13.276 million acres last year. The variant of rapeseed crushed to make heart-healthy vegetable oil has long been a favoured cash crop for Canadian farmers.
But in the past year, demand from both the food and emerging biofuel industry has surged. Canadian crushers have moved to expand existing operations, and three new mammoth crush plants are on the drawing board for Western Canada.
Traders said plantings could beat the record of 14.3 million acres in 1994, and could lead to Canada topping its 2005 record production of 9.66 million tonnes, which was harvested from plantings of 13.6 million acres. Farmers in Canada's Prairie grain belt usually plant the bulk of their crops in May, meaning actual plantings could vary from intentions.
Statscan surveyed 16,800 farmers by phone between March 23 and 31 for the report. Soil moisture is ample to excessive in many areas, and some traders are worried seeding could be delayed, which could hurt canola plantings in some areas but boost them in others.
Prices have also weakened, with new-crop canola futures prices at the Winnipeg Commodity Exchange slipping 4 percent from their peak in February. November futures were trading at C$379 per tonne, basis November on Friday. Meanwhile, US wheat futures have surged because of frost damage to the winter wheat crop, improving prospects for Canadian milling wheat prices and plantings. Oats prices have also been strong, and traders reported aggressive contracts have bought some acres away from canola.