It seems farmers never have too much grain and fertilizer storage. While 2018 won’t go down in history as the biggest prairie crop ever, storage will be at a premium for other reasons.
With the lousy harvest weather, a lot of crop will be harvested tough or even damp. It won’t be feasible to sell it in that condition, so producers will need to store it until it can be dried either with on-farm drying systems or commercial dryers.
In southern regions, harvest is generally much more advanced. High moisture grain isn’t a big concern, but prices are. Several commodities are at the low end of their historical price range and many producers will be keeping them in storage in the hope of better prices ahead.
Durum has become a dog with slow movement and steadily dropping values. No protein premium exists and the usual price premium to spring wheat has become a discount. Instead of durum being 50 cents or a dollar a bushel more valuable than spring wheat, it’s trailing by around a dollar a bushel.
Unless something changes, expect far fewer acres of durum seeded next spring. In the meantime, there’s no excitement in selling top quality durum for a mere $6 a bushel.
It’s the same situation with lentils. Saskatchewan producers cut their acreage a bit this year and also switched some red lentil acreage to green lentils. The result is no improvement in red lentil prices and a big drop in green lentil values.
Many producers carried over red lentils from last year hoping for an end to the pulse tariffs in India with a corresponding improvement in prices. Now they’re storing 2018 production along with much of last year’s crop.
All that on-farm inventory is likely to delay any price improvement, but if you can store long enough, you may be rewarded. However, when patience, revenue or storage runs short, you can end up selling for a price that may be little or no better than when the grain went into the bin.
The prize for the biggest price drop from one year to the next has to go to kabuli chickpeas. The acreage in southern Saskatchewan doubled in 2018, spurred by prices in the 60 plus cent a pound range. Acreage increased in many other regions of the world too and the end result is a price to growers this fall in the 23 cent a pound range.
Although it’s counterintuitive, next year’s seeded acreage may not crash as badly as you’d expect. With so many chickpeas in storage, producers will be tempted to clean and seed some hoping for a price improvement in 2019. Also, when you factor in low-priced seed, the economics of the crop look better.
Beyond tough grain and price-depressed grain, this may also be a year to buy and store fertilizer. There was no big price advantage to pre-buying fertilizer ahead of seeding this spring. However, since spring, nitrogen prices have risen and some analysts expect more increases will be coming.
If you have grain taking up space in fertilizer bins, it might not be the most valuable use for those bins.
Farmers in Western Canada probably have more grain storage relative to overall production than competing producers anywhere else in the world. It’s a big investment, but used wisely, it can be a big advantage.