Analysts say dry bean acres will be down in Canada and the United States this year, but they differ on the magnitude of the decline.
Brenda Tjaden Lepp, chief analyst with FarmLink Marketing Solutions, is forecasting a 25 to 35 percent drop in Canadian acres.
“The outlook is fairly decidedly bearish,” she said.
Big crops last year in Canada, the United States and Mexico caused a surplus of supplies. The region produced 2.68 million tonnes of beans last year, up 69 percent from the previous year.
“We’re kind of stuck with decent supplies and flat to lower demand,” said Tjaden Lepp. “There’s just going to be no sparks here probably until early to late 2014.”
She expected beans will lose ground to corn and soybeans in Manitoba.
“Our people say they’re just a hassle,” she said. “So if you can grow soybeans and corn with no hassle, then who cares about dry beans.”
Her acreage prediction would have been lower if it wasn’t for attractive new crop contracts that came out in December and January, which likely secured some 2013 bean production.
Processors offered 32 to 33 cents per pound for new crop pinto, navy and black beans, a good price considering the dismal fundamentals.
“We were frankly pretty surprised to see the prices that were available,” said Tjaden Lepp.
Agriculture Canada sees a 32 percent reduction in seeded acreage and a 38 percent drop in production in 2013-14.
However, supply will fall by only 16 percent because of large carry-in stocks from the 2012-13 crop. Agriculture Canada forecasts 40,000 tonnes of carryout despite a strong start to this year’s export program.
Brian Clancey, an analyst with Stat Publishing, forecasts a more modest 11 percent decline in acreage.
He feels strong exports will moderate acreage declines. Through the end of November, shipments are up 48 percent in Canada and 46 percent in the U.S. compared to the same time last year. Clancey expects excess supply in the NAFTA region will make it difficult for bean markets to post a sustained rally over the next 12 to 15 months.
Murad Al-Katib, president of Alliance Grain Traders Inc., is more optimistic because of strong demand from markets such as the U.S. Hispanic population.
“I still believe that beans have a very profitable outlook for 2013-14,” he said. “As a result, I’m not of the view that acreage is going to contract dramatically.”
Agriculture Canada predicts a nine percent increase in average bean prices in 2013-14 because of an expected decrease in U.S. and Canadian supply.
John Berthold, vice-president of Walhalla Bean Co., a North Dakota bean processor, said U.S. acres are heading lower. It’s just a question of how much.
“I hear numbers thrown around like 20 percent and some days I think we’re going to be down 50 percent, but it’s just hard to say,” he said.
Berthold thinks there could be a significant reduction in black bean acres. Mexico allowed the import of Chinese beans in 2012 for the first time in many years.
“It fundamentally changed the market overnight,” he said. “It really cut into our (black bean) exports to Mexico. We’ve got a pretty good supply.”
Mexican growers just harvested a good winter crop of black and pinto beans.