Canadian farmers planted even more wheat than was expected this year, driving sowings to the largest in nine years, official data showed, adding to pressure on grain futures from a strong dollar and US rains.
Canadian growers seeded 25.40m acres with wheat for the 2022 harvest – up by more than 2.0m acres year on year, and the biggest area since 2013, Statistics Canada said.
The plantings figure exceeded by some 360,000 acres the area that farmers surveyed in March said that they intended to seed with wheat, and was driven by a greater area allocation to spring wheat than had been thought.
Growers seeded 18.21m acres with spring wheat – nearly 580,000 acres more than shown by the March survey.
‘Feels like a greenhouse’
The data added to pressure on Minneapolis spring wheat futures, on a weak day anyway for major agricultural commodity contracts – undermined by a 1.5% surge in the dollar to its strongest levels against a basket of currencies since November 2002.
A strong dollar – which is being boosted by a quest for safe haven assets amid mounting recession fears – saps the value of dollar-denominated assets, such as many ags, by making them less affordable to buyers in other currencies.
Improved US Corn Belt growing conditions also hurt prices, in suggesting crops may be larger than investors have factored in.
Mike Mawdsley, based in the top corn-growing staet of Iowa, noted “some nice rains over the weekend and more expected for some as the week progresses.
“We did get rain locally… and it feels like a greenhouse outside this morning.”
Chicago corn futures for December, the best-traded lot, ended 4.8% lower at $5.78 ½ a bushel, a five-month closing low, with November soybeans slumping by 5.7% to $13.16 a bushel, their weakest finish since January.
Chicago soft red winter wheat for September shed 4.6% to settle at $8.07 a bushel, with September Minneapolis spring wheat plunging by 6.1% to $8.90 a bushel.
That was the first close below $9 in five months, and took to 37% the collapse in spring wheat prices from mid-May highs.
On energy markets, Brent crude plunged by 9.1% to $103.15 a barrel, although the S&P 500 share index did manage to recover nearly all its earlier losses to stand 0.3% lower in late trading.
Among soft commodities, cotton – which as an industrial commodity is seen as particularly sensitive to economic sentiment – locked for December down the New York exchange limit of 4.0 cents at 93.48 cents a pound.
Canola futures tumble
Winnipeg canola futures too got caught in the downdraft, shedding 2.1% to Can$828.60 a tonne for November, despite being denominated in a weakening Canadian dollar, after the Statistics Canada data showing farmers had planted more of the oilseed too than initially intended.
Earlier, the contract fell below Can$800 per tonne for the first time since January.
The canola sowings figure of 21.42m acres, while lower year on year, was more than 500,000 acres larger than the area shown by the March survey, and ahead of market expectations too.
By contrast, growers seeded, at 3.97m acres, a little less area with oats than they had proposed in the early spring, with barley area, at 7.04m acres, falling short by nearly 450,000 acres.
Statistics Canada said that factors influencing farmers’ final planting decisions included “high” prices of inputs such as fuel and fertilizer, “high crop prices resulting from low national and global supply, and the ongoing conflict in Ukraine”.
It also stressed mixed conditions for spring sowings in the key Prairies region, with dry weather in southern Alberta and western Saskatchewan, while exacerbating drought, providing producers with “the opportunity to seed at a near-normal pace”.
However, wetness in Manitoba, south eastern Saskatchewan and parts of northern Alberta, while alleviating dryness, meant that “seeding was delayed as a result”.
“This was most notable in Manitoba, where flooding resulted in seeding progress well below average at the time” the plantings data was collected, in the month to mid-June.