Jim Drinkwater thought he was doing pretty well for himself when he sold his rye crop soon after harvest last year.
Prices were around $3.50 a bushel, up sharply from the previous year and at a level that would provide a decent profit.
“The price was good at the time, and I needed the storage space, so we got rid of it,” he said from his farm at Glenboro, Man.
Since then, like growers of most other grain and oilseeds, Drinkwater has looked on with a mixture of amazement and disbelief as rye markets climbed past $6 and $8 to as high as $10 a bu.
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“Had I known what it was going to be worth now, I’d have probably kept it,” he said ruefully.
“But hindsight’s always 20-20.”
Drinkwater is one of a small minority of prairie farmers who grows fall seeded rye every year, usually around 400 to 500 acres. It’s a crucial part of his rotation, breaking up the fertilizer and chemical cycle. It’s also beneficial for the soil and reduces his workload in the spring.
It’s a low input crop and almost always produces a profit. As a rule of thumb, the break-even point is a return of around $90 an acre.
At an average yield of 40 bu. an acre and the current price of around $7 a bu., that translates into gross revenue in the range of $280 an acre.
Cal Vandaele of Vandaele Seeds in Medora, Man., said that’s highly competitive with any other crop.
“At current market prices, and even an average yield, rye will return as much money as anything else out there,” he said. “It’s one of the cheapest crops to produce, so with these price levels it’s without a doubt one of the best returns of any crop.”
Vandaele, who calls himself “the rye guy” on the company’s website, says he’s never seen prices as high as they are now. There’s nothing specific to the rye market that would account for such a big rise in price, he said, so it must be driven largely by the increase in other grains and oilseeds.
He said activity in the market is starting to slow down as buyers shy away from the record high prices.
“Probably 75 to 80 percent has been marketed and I’d say the vast majority of farmers sold in the $3 to $6 range last fall,” he said.
Rye is sold into three markets: milling; distilling and feed.
Prices are usually highest in Manitoba because of its proximity to the high value milling market in the United States and lowest in Alberta, where most is sold for feed.
Last year’s harvest has been estimated by Agriculture Canada at 233,000 tonnes, down from 383,000 in 2006. As a result prices last fall were $3 to $3.50 a bu., up from around $2.50 the year before.
With carryout stocks down sharply, plantings in the fall likely increased.
That’s what Jake Davidson of the Saskatchewan Winter Cereals Development Commission thinks.
“Winter wheat went up to 600,000 acres (in Saskatchewan) , so with winter wheat up you would expect rye to be up too,” he said.
Statistics Canada estimated that fall rye climbed to 170,000 acres in Saskatchewan, up from 68,800 the year before. In Manitoba, area climbed to 70,000 from 28,300 and in Alberta area increased to 100,000 from 40,500.
Vandaele doesn’t know what the market will do over the next few months.
“Your guess is as good as mine,” he said, adding that’s the case with all the grain and oilseed markets. “High markets can only stay high for so long. Who knows for how long?”
