Farmers’ spring plans await new crop prices

It’s seldom a good idea to make seeding plans with your eyes riveted on the rear-view mirror. Prices received for the 2019 crop may bear little resemblance to the prices for 2020 production.

Some producers seldom deviate from their rotation growing the same two or three crops each year. Other producers will alter their rotation in search of more profitable options. If, like me, you’re in this second camp, beware of the rear-view mirror syndrome.

Based on 2019 prices, seeded acreage is likely to increase on durum, oats, flax, green peas, yellow mustard and canaryseed.

Carryover production, yields, quality and worldwide economic factors all factor into the supply and demand equation, but seeded acreage is a critical component. The same price stimulus that causes Canadian farmers to seed more of a particular crop can also stimulate acres in other countries.

In January, new crop bids are often widely available for pulse and special crops. Not so much this year. Market uncertainty seems to be delaying new crop contracting opportunities.

Producers see prices approaching $12 per bushel for old crop green peas, but new crop price indications have been slow to materialize. While it’s logical to assume the huge price premium of green peas over yellows will narrow, the marketplace isn’t offering any indications of how much.

Canaryseed is another example. The price for this minor acreage crop shot up from around 24 cents a pound to around 30 cents during harvest. The price has remained around 29 cents, the highest in a decade.

That’s attractive and it will no doubt encourage more canaryseed to be planted this spring. Market analyst Chuck Penner of Leftfield Commodity Research forecasts 325,000 acres, an increase of 33 percent. By comparison, market analysts with Agriculture Canada in their latest report anticipate only a six percent increase.

What if so many growers jump on the canaryseed bandwagon that supply becomes burdensome once again? Unfortunately, new crop price protection isn’t available. Despite some postings suggesting the availability of contracts at 25 or 26 cents a lb., it doesn’t appear that any companies are actually contracting.

Canada dominates the world export market for canaryseed and there’s very little substitution among the different birdseeds. The amount purchased each year is consistent. The main variable is Canadian production. On other crops, substitution, multiple uses and outside competition make the market more difficult to decipher.

Mustard is one specialty crop where many companies do have 2020 price contracts. At 39 or 40 cents a lb., yellow mustard will probably see an acreage increase despite being the lowest yielding type.

Brown mustard with new crop contract prices around 27 or 28 cents looks less exciting and acreage could be flat to lower. Oriental mustard prices have lagged in recent years and contract prices are a mere 23 cents. However, for a couple specific oriental varieties, contract prices are much more attractive.

On a typical year, a higher percentage of mustard is grown under contract than most other crops. While yellow mustard will likely see a large acreage increase, at least growers have the ability to lock in an attractive price on part of their upcoming production.

To some extent, this also exists for new crop oats and flax, but so far it’s missing in lentils. Hopefully, more contract prices will materialize in the weeks ahead.

Kevin Hursh is an agricultural journalist, consultant and farmer. He can be reached by e-mail at kevin@hursh.ca.

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