The 2019 growing season will see some big cropping shifts. It’s unusual for trends to be this clear so far in advance, but we’ve seen some unusual factors in the marketplace.
In general terms, durum, lentils and soybeans will be planted on much fewer acres with canola, spring wheat and barley picking up most of the slack.
With the loss of the Italian market for Canadian durum and with the world supply and demand situation, durum just isn’t paying the bills. Most of this year’s durum is top quality with high protein, and it’s still selling for bargain basement values. No protein premium exists and the spread is unusually narrow between No. 1 and No. 3.
A great deal of durum will remain in storage as producers try to wait out the market, but that will delay any eventual price recovery. Many durum growers will look for a different cereal crop option in 2019.
Some suggest this switch will be mainly in the fringe areas for durum. However, look for changes even within the heart of southern Saskatchewan’s durum country. Spring wheat is going to reappear on some farms for the first time in years and there will also be more barley.
Spring wheat prices have been much stronger than durum, which is the inverse of the normal relationship. What’s more, many market analysts have become quite bullish on wheat.
Feed barley prices are also comparatively strong. Typically, feed barley has been dependent on the domestic market, particularly feedlot alley in southern Alberta. This year, a lot of that demand is being filled with American corn, but barley prices have held up quite well.
The difference this year and also last year is a significant export program for feed barley. In some markets, barley is preferred even though corn would be equally as accessible.
The price premium for malting barley seems to be all over the map, depending on the variety of barley, the location and the end user. However, the premium is significant in many cases and that too will encourage more barley in 2019.
Meanwhile, lentil acres are likely to see another significant drop. In 2018, many growers switched from red lentils to large green lentils, which were commanding a better price. As a result, the green lentil market has been swamped and prices have plummeted.
The market in India has not reopened, and lentils are not profitable unless you’re lucky enough to attain high yields. Green lentils lose grade over time when stored, but that isn’t such a concern with reds, and like durum, a lot of them are sitting in storage waiting for an eventual price improvement.
Unless there’s some big surprise in the market, both red and green lentil acreage will see a significant drop next year.
The other clear cut loser is soybeans. History will show 2017 as the acreage peak in Western Canada. Acreage was down in both Manitoba and Saskatchewan in 2018, and based on yield and quality results, acreage will decline again next year.
Soybeans will remain an important crop in Manitoba, and acreage could resume its upward trend at some point in the future, but for now excitement has waned.
Canola is going to pick up some of the acreage lost to soybeans, and it will also increase in the non-traditional canola region as producers there move away from durum and lentils.