Before Bernie Sambrook makes up his mind on what he puts in the ground this spring, he’s keeping one eye on grain marketing issues and the other on crop conditions south of the border.
Sambrook crops 1,280 acres near Medora in southwestern Manitoba. He’s contracted 160 acres for Linola and another 160 acres for Excel malting barley.
He figures he’ll put about 640 acres into prairie spring wheat, which he likes for its ability to withstand water and weathering.
High yields mean he can usually get similar returns per acre as he would for high-protein Canadian western red spring wheat.
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For his final quarter section, Sambrook is examining two factors:
- The results of the barley marketing vote. Sambrook doesn’t expect the majority of farmers to vote for an open barley market, although he would be “tickled pink” if it happened, and would plant more barley.
- The condition of the U.S. winter wheat crop, and the size of Canadian wheat carryovers.
If the U.S. crop has problems, and the backlog of wheat here starts moving, Sambrook said he may plant more prairie spring wheat.
Otherwise, he’ll probably plant canola on the quarter section.
“Even though there might be more acres of canola in, I know our system can handle those greater acres,” Sambrook said.
“Although the price may drop, I know (the seed) will move. Grain sitting in my bins does not generate cash flow.”
Factors to watch
Market watchers say farmers like Sambrook are on the right track. Here are some suggestions of what to watch while planning what to plant:
- New-crop prices, not nearby prices. “Farmers tend to move into what looks good right now,” said Charles Hume of Keystone Marketing Services.
For instance, Hume said many farmers would look at May canola futures, which last week were around $412 per tonne. But November futures were at $371 per tonne.
- Crushing margins. Mike Jubinville of Growers’ Marketing Services expects domestic crushers, including a new one near Winnipeg, will switch into high gear.
- The value of the dollar, which can affect export demand.
- Transportation logistics. The longer the holdups, the more chance Canadian wheat will compete with U.S. winter wheat, harvested in May and June.
- The international scene. Analysts point to European export subsidies, Chinese demand for wheat and the condition of U.S. winter wheat and Brazilian soybeans as market movers.
Analysts encourage farmers to price some crop early. Farmers who know what prices spell profit on their farms can use rallies to sell parts of their new crop.
They also said farmers shouldn’t be too discouraged by lower prices. Jubinville said world stocks of grain are still considered low.
“We’re one crop problem away from having some very exciting potential develop in these markets,” he said.
“We’ll be back up there again,” added Hume. “And it’s not going to take 15 years, like it did the last time.”
