Canaryseed producers in Canada are unlikely to see a significant increase in acreage or price during the coming months, says a market analyst with Kostal Ag Consulting in Winnipeg.
Greg Kostal told canaryseed producers at Crop Production Week in Saskatoon that Canada’s canaryseed acreage is likely to be larger than last year but barring an unexpectedly large decrease in wheat prices in the next Pool Return Outlook, it should remain around 400,000 acres.
Producers dreaming of a return to the mid-1990s when canaryseed prices peaked at 40 cents per pound should come to grips with reality, he added.
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Canaryseed prices have been holding steady at 19 or 20 cents per pound for the better part of a year and there is no reason to believe there are significantly higher prices on the horizon, he said.
“There are two things that have to happen before you get 40 cents for your canaryseed,” said Kostal.
“You’ve got to have a yield wreck or you’ve got to market two pounds. Then you’ll get your 40 cents.”
Kostal said carryout stocks in Canada are shrinking but not enough to have a significant impact on prices.
Ending stocks for Canadian canaryseed in 2009-10 are estimated in the 40,000 to 45,000 tonne range, down from 75,000 to 80,000 tonnes in 2008-09.
However, an average sized crop in 2010 and average yields should mean stable world stocks and stable prices in the foreseeable future.
“From an ending stocks perspective, yes, we know stocks are shrinking but we are not in a demand rationing environment per se, as we were back when stocks were below 25,000 tonnes.”
Canada is easily the world’s largest producer of canaryseed, accounting for roughly 75 percent of world production and 80 percent of global exports. Canadian production fell to around 150,000 tonnes in 2009-10, down from roughly 190,000 tonnes a year earlier.
Demand for Canadian canaryseed is relatively stable from year to year.
Canadian exports over the past decade have averaged about 167,000 tonnes annually.
Export sales were significantly below average in 2008-09 and are likely to fall slightly short of the average again in 2009-10, Kostal said.
It’s hard to say how much canaryseed acreage will change in the spring because production hinges on the market value of substitute cereal crops such as wheat, durum, barley and oats, he added.
Sluggish demand for durum will likely result in some additional canaryseed plantings this spring.
Wheat prices in the Canadian Wheat Board’s next outlook, due in late February, could also influence acreage.
“For now, I think the canaryseed market is content to sit back until it sees the (next round of) PROs,” he said.
If Canadian acreage hovers in the 400,000 to 450,000 acre range, as it has done in three of the last five years, an average yield should satisfy markets and provide sideways price movement in the 20 cent per pound range, Kostal said.
“All we need, statistically, to keep the status quo is about 400,000 acres,” he said.
“At that level, all things considered, I think the market has done what it has to do to get you 200,000 tonnes (of production).”
Unless carryout stocks reach unusually low levels, canaryseed prices are likely to remain stable.
In the mid-1990s, Canada’s ending stocks fell below 25,000 tonnes, resulting in increased competition among foreign buyers and prices that peaked briefly above 40 cents per pound.
Kostal also told producers that a pre-seeding price rally could have a negative impact on longer-term prices.
If prices were to rally to the 22 or 23 cent per lb. level before next spring, Canadian producers will likely seed more acres and produce an oversized crop.
That would create burdensome supplies and put downward pressure on prices.
Saskatchewan, the largest producer of canaryseed in Western Canada, is responsible for roughly 90 percent of Canada’s total production.
