Canaryseed markets are experiencing a small rally despite a burdensome carryover from last year’s harvest.
Growers have seen prices rise to as high as 10 cents per pound from 8.5 cents per lb. a few weeks ago as processors scramble to fill orders.
“They need some canaryseed and all the farmers are too busy seeding to bring much in,” said Ken Schikowski, president of the Canaryseed Association of Canada.
Processors have been buying on a hand-to-mouth basis so they don’t have much inventory of the crop and have been forced to bump up prices to attract supply, he said.
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But for Schikowski, a canaryseed grower from Regina, the new prices are not that enticing.
“I’ve got some in the bins that has sat here for two years. It might as well sit here for another year,” he said.
While an 18 percent increase sounds impressive it is based on values that were hovering around all-time lows.
“It is below the cost of production,” said Schikowski.
But if growers are waiting for prices to rise much higher, they could be in for a lot of foot tapping, said Steve Foster, canaryseed trader with Saskatchewan Wheat Pool.
Last week Foster had trouble loading a train with canaryseed at an undisclosed location in Saskatchewan. Growers refused to deliver the grain they had promised.
“Of course the farmers know the train is sitting there so they are holding out and not going to sell,” said Foster.
But his customers in Europe are unwilling to pay what it will take to give growers a price beyond 10 cents per lb.
Processors are chasing canaryseed in certain corridors of the province, but Foster expects the current “spot frenzy” to be short-lived because the bigger picture includes a burdensome supply carried over from last year’s crop.
“I don’t see this thing going to 15 cents,” he said.
According to Statistics Canada, there will be 185,000 tonnes of canaryseed carried into the new crop year, which is 20,000 tonnes more than the average annual exports of the crop.
While growers plan to cut seeded area by one third from last year, they will still plant an estimated 311,000 acres of canaryseed, which is expected to contribute another 120,000 tonnes of supply.
So while farmers seem to be holding all the cards during this rally, they are still being weighed down by a few years of overproduction.
That’s why Foster expects this rally to fizzle soon unless Mexico starts buying canaryseed.
“That could keep this rally flowing through this summer,” he said.
Schikowski thinks prices will fall once farmers finish seeding and start delivering to generate some cash flow.
But he doesn’t plan to move any of his inventory at nine or 10 cents per lb. when it cost him 11-12 cents per lb. to grow the crop.
“It doesn’t work on my farm,” he said.
