Canola Price Premium Over Wheat Helps Fuel Grower Optimism at Harvest 2016Sat, 04 Jun 2016 07:44:51 CDT
Ron Sholar is the executive Director of the Great Plains Canola Association and he has provided the following update on the efforts to harvest the 2016 winter canola crop in Oklahoma- supplied to the Oklahoma Farm Report on Friday evening, June 3rd:
"April and May rains and favorable weather for maturing the canola crop generated a good deal of optimism for growers this year. But then, much like last year, the rains continued and continued bringing stress for growers waiting to get going on a crop ripe and redy for harvest.
"A midweek excursion through Oklahoma canola country revealed little crop harvesting progress had been made in the last week. During the weekend of May 28 and 29, some canola that had been swathed for a while was finally picked up but more rain on Monday and Tuesday had once again ground things to a halt. On Wednesday, seeing canola being harvested anywhere in the state was a rare sight.
"The grain elevator at Hillsdale, OK reports that as of June 1st they have received 15 loads of canola but this is one of the few sites that has actually received any canola at all.
"On Wednesday, Jeff Scott of Pond Creek was taking advantage of a small but important window of opportunity by combining some canola that had been in the windrow for about 10 days. He and his crew were running full bore with three combines, two grain carts, and five trucks in perpetual motion...threshing, transferring, and hauling grain to the elevator. But as night fall neared, rain saturated clouds and lightning flashes to the south threatened to shut everything down. Yields were running between 45 and 50 bushels per acre and fields with even more promise were waiting their turn.
"Much of western Oklahoma received rain on Wednesday night and Thursday morning and now even more drying out will be needed to get the combines into the fields and keep them rolling. All that's needed is some favorable harvesting weather and this crop will come out of the field in a very short period of time.
The Crop So Far
"A visual assessment of the canola crop (admittedly, not very scientific) combined with limited, early harvesting results lead to cautious optimism about the potential for this crop. This year's crop certainly will be more productive than either of the previous two.
"So far, most yields are in the 35-40 bushels per acre range but some are coming in at 50 bushels per acre. This is a much better situation than that of the last two years and dramatically better than the disastrous crop of 2014. That year, the canola crop endured an almost season long drought which began soon after the crop emerged.
"Even as sluggish as progress has been for canola harvest, wheat harvest is going at an even slower pace. The rains have kept harvest from beginning in most of the state and lodging and late emerging weeds are beginning to show up and are sure to be problems. While canola prices aren't what they were in the high water mark year of 2012 (and they aren't going to be again any time soon), prices are better than they were in 2015. Because of the importance of wheat to Oklahoma and the fact that most canola producers also grow wheat, the economics of producing canola are inextricably linked to those of wheat.
"It's bad for the state's economy and bad for everyone in agriculture for wheat prices to be as low as they are now. But farmers who have grown canola, are growing it, or are still just thinking about growing it should take note of the price differential between canola and wheat. A $2/bu price advantage for canola over wheat has been considered to be needed to justify the additional production costs of planting canola. Last year, that price differential dwindled down to less than $1/bu. With the current $3/bu advantage for canola compared to wheat and the good canola crop that is waiting for harvest, expect more canola to be planted in the future. Is the $3/bu difference a permanent thing? Nothing in agriculture is permanent. But at least the trend is positive and the market place is signaling a strong future demand for U.S. canola. Canada has reduced their acres this year and that should be a positive development for the U.S.
"Friday June 3 Update After a rainy Thursday, some combines are back in the field on Friday. Harvest has been a slow go but conditions look pretty promising for next week. How often do we protest too much rain in this part of the world? Not very often. As always, we know that we will be anxious to get some moisture later on."
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