There is a catch with the rye

Dry fall fields and solid stocks kept rye prices bottled up at a time when the crop needed to go in the prairie ground last year. The result is that the margin between rye and other cereals, such as barley and wheat, is narrowed for 2018.

“It’s the smallest crop in years,” rye marketer and seed supplier Cal Vandaele said about what is growing in western Canadian fields this summer.

“It’s 50 percent down from last year, more perhaps, maybe as much as 70. At any rate, it is a big drop and the market has reacted accordingly.”

Last week’s Statistics Canada seeded acreage report puts the harvested crop at 85 percent of 2017’s harvest, but the grain trade is suggesting that it is far below that.

The June report showed Canadian farmers planting 13 percent fewer acres with 308,750 acres being planted and 234,650 acres being harvested with an estimated average yield of 46 bushels per acre compared to 51 bu. last year.

Both years’ yields are low by regular rye producers’ standards, especially considering the higher yields that have been reported with recent hybrid varieties.

“I did a bit of a poll (recently) — called 12 farmers, all regular rye growers, within 150 miles of our plant. I found them down 60 percent. They seeded 40 percent of what they did last year,” said Vandaele, one of the family members who owns Vandaele Seeds in Medora, Man.

“And I think that is typical, so the StatsCan estimate might be off by a fair bit this year.”

Rye has been proving popular in the United States. Vandaele said demand has been increasing in recent years, and the current season is no exception with new markets for feed.

There has been steady use by the food industry and distillers and an increase in cover crop planting in the U.S. and Central Canada. Also, an American road infrastructure rebuilding initiative that uses rye for erosion control has been announced.

“So there is a bit of a tick-up in demand out there,” he said.

Canadian rye exports are up about 35 percent over the five year average so far in this crop year, based on Statistics Canada export reports. Most of the new sales are to the U.S.

Shipments were more than 20,000 tonnes in April alone, about three times higher than average, according to last week’s federal Outlook for Principal Crops report. Typically, the crop’s movement peaks in August and September, so the market is looking for even bigger months come.

However, relatively high carry-in stocks remain despite solid performance from the trade, although these have fallen eight percent from what was expected to 150,000 tonnes.

Statistics Canada suggests that feed use might be lower than last year, which will contribute to lower domestic disappearance by as much as 19 percent this year.

However, the trade seems unconvinced of this because prices for new crop contracts are higher than for the 2017-18 crop and cash prices are bullish. All factors considered, the relatively high carryout from last season will fall by 27 percent for the coming crop to 110,000 tonnes.

The smaller Canadian carryout, when combined with a smaller American crop than average, spells higher prices for producers and good demand for processors and sellers.

Reported cash prices, in-store Saskatoon, from two years ago of about $2.90 seem to be well behind this current crop, or even the $4 of last season, because Statistics Canada is predicting prices higher than $4.50. Terra Grains of Belle Plaine, Sask., is posting a July price of $5, while its new crop with fall delivery offer is $4.70.

The U.S. Department of Agriculture is estimating that rye production in that country will be up about 21 percent over last year, but that was a much lower production year for the country, and this year’s projected harvest will be similar to 2016-17.

Global production will fall about two percent for the current crop, says USDA.

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