Increased acres likely to pull down bean prices

Fewer buyers | Bean production up but canaryseed crop smaller

Growers should expect a cooling off in bean prices in 2014-15, says a market analyst.

Canadian farmers increased dry bean acreage by 30 percent this year, as did their American counterparts.

“We’re going to see some pressure on prices from that increased production,” Chuck Penner, analyst with LeftField Commodity Research, told delegates attending the 2014 Canadian Special Crops Association convention.

White bean prices skyrocketed last year in response to poor crops in Argentina and China and strong demand from the Middle East and North Africa (MENA).

Black bean prices have responded to two years of disappointing Brazilian production.

Pinto prices were the exception. They have dropped off due to two years of good Mexican bean crops.

Penner said Argentina and Brazil have propped up bean prices with their disappointing crops, but that situation is about to change.

He is forecasting more than 350,000 tonnes of production in Argentina, up from less than 100,000 tonnes last year. Argentina produces mostly white beans. 

Brazil is expected to bounce back as well with an estimated 3.7 million tonnes of production, up one million from the previous year. Brazil is known primarily as a black bean producer.

“Brazil has been driving a lot of the stronger black bean demand in the last year. Now they’re growing more, so there’s a bit of a warning signal,” said Penner.

The good news is that the MENA region is expected to remain a strong buyer of beans, particularly white beans.

“I don’t know that we’re going to be going back to those highs that we had last year, but we’re going to see some solid demand still continuing from the Middle East and North Africa that will provide a little bit of a (price) floor,” he said.

North American farmers increased black bean acres a lot more than pinto beans, so there could be a revival in pinto prices later in the year.

Ivan Sabourin, merchandiser with Legumex Walker, said processors are counting on a big bean harvest.

“Yes, a 40 percent increase in some varieties might sound very bearish, but you have to realize that we’ve got no carryout whatsoever,” he said.

That’s not exactly true. There are some pinto bean stocks in North America and there are limited supplies of other classes in the Middle East, but those will not be exported.

Canaryseed acreage is extremely difficult to pinpoint, but Penner is confident that it is less than 275,000 acres. That would make it bigger than last year but well below the five-year average.

He recently scaled back his yield and production estimates due to rapidly declining crop conditions. Penner expects 120,000 tonnes of production, down from his earlier estimate of 146,000 tonnes.

That will make for a smaller-than-usual export program and tight ending stocks. Demand has been assisted by unusually strong interest from Indonesia.

“It’s going to be a tight year. There is going to be some demand rationing that will need to be going on as a result of that,” he said.

Growers planted 465,000 acres of mustard, up 100,000 acres from a year ago. Oriental acres are up 50 percent while brown and yellow acres are up 20 to 25 percent.

Penner is forecasting 194,000 tonnes of production, up seven percent from last year. Mustard production isn’t as heavily concentrated in the soggy regions of the Prairies as canaryseed.

He anticipates increased export competition from the Black Sea region because it is a cheap crop to grow in a year of declining crop prices.

Canada should have enough supply to maintain a healthy export program of about 135,000 tonnes, which is what is forecast for 2013-14.

“Just another steady, solid year for mustard,” he said. “I’m seeing steady prices again.”

Statistics Canada was forecasting 100,000 sunflower acres, but Penner thinks it will end up closer to 85,000 acres due to flooding. 

Two-thirds will be confectionary varieties with the remainder oilseed types. That is back to the traditional relationship after a couple of years of half-and-half.

Exports will be limited to 40,000 tonnes due to tight supplies. Penner expects some softness in confectionary prices and even more pressure on oilseed types due to the collapsing soybean price complex.

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