Canaryseed prices took flight this year and there is little chance of them settling back to earth in the new crop year.
Marlene Boersch of Mercantile Consulting Venture Inc. told farmers attending the Canaryseed Development Commission of Saskatchewan meeting held during Crop Production Week in Saskatoon that Canada’s dominant role in world canaryseed exports gives producers a strong hand.
This country supplies almost 85 percent of world exports that total 190,000 to 200,000 tonnes per year.
Hot, dry weather last summer hurt yields leading to a crop of about 162,000 tonnes, about 20,000 tonnes short of Canada’s annual exports, meaning year end stocks will drop.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
“Canadian supplies are becoming ever more important and it means that the ball is in the court of the farmers for once,” she said.
“You are in the driver’s seat for this crop. The growing decisions you make can be very explosive.”
Demand for the birdseed is inelastic, meaning price does not significantly influence how much is used, so buyers will have to pay up to get supply.
Contracts for 2008 production are starting to emerge at the 20 to 23 cents per pound level, roughly equal to current old crop prices.
Boersch believes new crop bids will have to climb by two or three cents to get the needed acreage.
Production is unlikely to grow in other canaryseed growing regions such as Argentina or the United States because of the strong competition from high corn and soybean prices.
“Don’t forget, if we have any (crop) wrecks with dry conditions, which is certainly in the cards right now, we need a little more cushion because it is not going to come from anywhere else.”
She said that 25 cent per lb. bids will be needed to get enough Canadian production to meet export demand.
“We need another five to 10 percent (acreage increase) to be reasonably comfortable and to do that we need price signals a little higher than we have right now.”
She said that even 25 cents per lb. is not that attractive given rising production costs and strong competition from crops such as durum and lentils.
Even with a five percent increase in acreage and normal yields, Canadian stocks at the end of 2008-09 would likely drop.
