Virtually every cropping option looked profitable a year ago. Looking ahead to next year, however, we might want to ask Santa Claus for a sharper pencil.
Marketing and moving the huge 2013 crop is still foremost in the minds of producers, but cropping and marketing options for next growing season will come under increasing scrutiny in the weeks ahead.
Saskatchewan’s agriculture ministry publishes a Crop Planning Guide in January, basing its price assumptions on information and analysis from early December, right around now.
Unfortunately, most crops are in the underachieving category.
Wheat prices for crop planning purposes as estimated one year ago were $7.15 per bushel on spring wheat, $7.35 on durum and $6.80 on Canada Prairie Spring wheat. These were reasonable assumptions at the time, but far higher than what the marketplace is now offering.
Top quality spring wheat and durum with strong protein are less than $6, and most of this year’s production has lower protein and is worth even less. Wheat that’s going into ethanol or feed markets has dropped an even greater amount.
Feed barley and oats one year ago had new crop estimated prices of $4.50 and $2.90, respectively. That’s reasonably close for top quality milling oats, depending upon freight, but feed barley in Saskatchewan is scarcely higher than $3 in most locations.
Canola in the 2013 Crop Planning Guide was pegged at $12 a bushel. It probably seemed conservative at the time, but current canola prices have been generally less than $10.50.
As we project forward to next fall, there are few reasons to anticipate drastic price increases in wheat, durum, feed barley, oats or canola. Anything can happen, but for budgeting purposes, most of us will use price projections close to the current values.
Yields were far higher than normal this year, but 2014 margins take a big hit when pencilling in average yields at prevailing prices.
Lentil prices are soft at 18 to 19 cents a pound. Chickpeas are hard to sell at any price.
Canaryseed is disappointing at 23 or 24 cents a lb. but still compares favourably with other cereal options.
A few crops have held their value better than expected.
Flax is one of these overachievers at prices around $13 a bu. You have to think more flax will be seeded in the upcoming year.
Yellow pea prices have declined substantially over the past year and are in the $6.25 range. Green pea prices have declined as well but not by as much as many had expected. Seed supply was tight and very costly, so that may have limited acreage.
Green peas are still around $12 a bu., and there have been some new crop contracts at around $9. Expect more producers to try green peas. Mustard prices have also held up better than other crops.
Fertilizer prices are down substantially from a year ago, so that will help on the cost side of the equation.
There may also be some pressure on cash rents, but competition for land has been fierce and it will take awhile for rents to fall into line with the reduced margins. As well, many cash rents are multi-year deals.
Being risk adverse, I’ve locked in some new crop prices that I consider profitable. It was a good strategy for 2013. Time will tell for 2014.
Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at [email protected]