This could be the year the canaryseed market fully absorbs the “hidden inventory” that has been weighing down prices for years, say industry officials.
Prices have climbed to 30 cents per pound as the inventory dwindles and that appears to be a trigger point for those who have been sitting on the crop.
Lucas Sutherland, chair of the Canary Seed Development Commission of Saskatchewan, said it certainly piqued the interest of his friend’s father who retired from farming five years ago.
“When it hit 30 cents (my friend) was laughing because his dad was at the coffee shop and he bolted out to go sell the canary,” he said.
Sutherland has heard a few tales of canaryseed hitting the market after being stowed away for many years because it finally reached that magical trigger price.
“It’s such a strange commodity. It’s like they’re sitting on gold,” he said.
“I do find it humorous that it’s always a nice round number. I’m the same way. I don’t know what it is about us farmers.”
It is rare for canaryseed prices to approach today’s levels. It happened briefly in 2015 and again in 2011. But for some stubborn growers, today’s price still isn’t high enough.
Sutherland has a buddy that works at a canaryseed plant in Eston, Sask., who has a list of growers that told him to call them when prices reached 30 cents.
“He phones them and they say, ‘phone me when it gets to 35.’ He kind of chuckles at that. It’s always a moving target,” he said.
David Nobbs, special crops trade manager with Purely Canada Foods, thinks those stingy farmers might get their wish.
“I think we’re going to see (prices) firm in the new year,” he said.
Nobbs doesn’t see the market heading down any time soon because supplies are tight.
Canaryseed prices jumped in September after Statistics Canada released its first 2019-20 production estimate of 80,000 tonnes, down from 158,000 tonnes the previous year.
That prompted processors to raise prices to lure stored canaryseed out of the bins so they wouldn’t be caught short.
Statistics Canada revised its production estimate to 125,000 tonnes in early December, but prices remained at the 30-cent level because it would still be the smallest crop since 2001-02 and the long-stored supplies of the crop are dwindling.
For years, Nobbs accused Statistics Canada of understating canaryseed acres and production.
Their acreage numbers didn’t make sense because supplies appeared tight but the market never responded that way, with prices languishing in the 22 to 24 cents per lb. range for years.
But when he compared Statistics Canada’s estimates to Saskatchewan Crop Insurance data, he realized that Statistics Canada has been right all along.
What was incorrect was the amount of carry-in supplies the market was using. He figures there was once as much as 100,000 tonnes of “hidden inventory” dating back to 2004 when planting peaked at 860,000 acres.
That hidden inventory has slowly been whittled down as acres have plummeted but it took a lot longer than many anticipated.
Nobbs believes this is the year it will finally disappear for good.
Saskatchewan Crop Insurance reports that growers insured 163,000 acres of the crop. About 20 percent of acres in the province are uninsured, so the total would be 195,600 acres.
That will likely equate to 2019 production of 90,000 to 100,000 tonnes. There was probably another 25,000 to 30,000 tonnes of carryout.
Canada typically exports about 150,000 tonnes of the crop. That means prices will have to rise to ration demand to Canada’s top markets, which are Mexico, the European Union and Brazil.
Some people have suggested that buyers will switch to alternative crops such as millet.
Nobbs said most of the Mexican demand is for pure canaryseed. Buyers in that country don’t like to use blends. Customers in the EU use blends but the formulas are set in stone.
“I don’t really buy into the idea of substitution,” he said.
Overseas buyers have been patiently waiting for Canadian prices to drop but Nobbs is starting to get more inquiries because buyers realize it is almost 10 months until Canada harvests another crop.
He believes it is only a matter of time before they start believing the Canadian supply numbers and start buying the crop so they are not caught short.
“If I had canary I’d probably hold it a couple more months,” said Nobbs.