Merv Berscheid offered up a nibble of canaryseed advice at Crop Production Week that had the boo-birds chirping.
“If you can get 11 to 12 cents per pound on your canaryseed right now, I would be 100 percent sold out,” said the CGF Brokerage & Consulting analyst.
Even though he deliberately repeated the phrase for added emphasis Berscheid, was still asked in the question and answer session of his markets outlook presentation if he seriously meant what he said. So he repeated it a third time.
Bewildered farmers in attendance couldn’t believe what they were hearing.
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“Jesus, that’s terrible,” said one producer.
Berscheid said poor prices are the direct result of Saskatchewan’s record 840,000 acre crop, up 53 percent from an already well-above-average 2003 crop.
He said there were drought concerns in western Saskatchewan heading into spring and farmers decided to plant large volumes of canaryseed to take advantage of relatively attractive crop insurance rates.
Then rains came and farmers ended up producing 301,000 tonnes of the crop, a record harvest almost twice as big as the traditional worldwide demand for Canadian canaryseed.
Even when domestic consumption is factored in, there will still be a massive carryover of the birdseed ingredient resulting in a 67.3 percent stocks-to-use ratio, which is considerably higher than the 11-year average of 38.8 percent.
“That’s not good news,” Berscheid told the 110 producers registered for the canaryseed portion of Crop Production Week.
“There’s only so many birds in the world.”
When asked where he came up with his production numbers, Berscheid said he used Statistics Canada’s national production figure of 880,000 seeded acres, subtracted 100,000 acres as unharvestable due to poor weather conditions, and multiplied that by a yield estimate of 836 pounds per acre to arrive at 301,000 tonnes.
“I told you, he just guessed,” muttered one disgruntled farmer in attendance.
When 2003-04 crop carryover is added into the equation, total supply amounts to 368,000 tonnes, which is well above the 19-year average of 218,000 tonnes.
This marks the fourth time total supply has topped 275,000 tonnes and in each of the past three instances the grower price was mired in the 10-12 cents per lb. range, which is well below the 13-year average of 16.6 cents per lb.
Berscheid doesn’t expect to see any price improvement until 2006-07.
“It won’t be a three-month fix; it’s going to be a couple-of-years fix,” said the Saskatoon crop broker and market analyst.
That’s assuming acreage levels drop substantially next year, but with most commodity prices in the tank that is by no means a given.
So unless they plan to refill their bins and sit on the crop for a while, growers may be forced to jump on new crop contracts at or below 10 cents per lb.
Berscheid realizes this isn’t what growers want to hear but unless there is a serious crop wreck in 2005 it is shaping up to be the reality.
“The only way I can see things getting better is to go home and encourage everyone you know to buy budgie birds,” he told his unimpressed audience.
