Canaryseed growers are hoarding supplies in hopes of a weather-induced price spike similar to what happened in 2002.
According to Statistics Canada’s March 31 grain stocks estimate, farmers were sitting on 155,000 tonnes of canaryseed, slightly more than half of the total supply available in the 2006-07 crop year.
“The biggest challenge is the guys that are holding carryover are the same guys that held it over for the last however many years, waiting for that market hiccup so it runs up to 40 cents,” said Steve Foster, canaryseed trader with Saskatchewan Wheat Pool.
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The crop usually trades in the 10 to 18 cents per pound range but occasionally a crop disaster sends prices skyrocketing, such as in 2002, when they hit 42 cents per lb. Saskatchewan produces about 80 percent of the world’s canaryseed, so the province’s growers have a tremendous impact on prices.
Canaryseed stores well so some growers are willing to wait as long as it takes in hopes of a big payoff during a year of drought or frost.
Sourcing old crop isn’t the only challenge. Foster is finding it difficult to lock in new crop contracts as well, although he thinks that is a temporary condition. He is offering contracts worth 17 to 18 cents per lb. delivered with no Act of God clause.
“They will definitely book some at those values,” he predicted.
Ken Schikowski, a Regina grower and president of the Canaryseed Association of Canada, said farmers may not be biting on new crop contracts, but the strong prices are encouraging more acreage.
“It’s in that 17 to 18 cent range at the moment. That would entice folks that normally grow it to go back into it again,” he said.
Agriculture Canada is forecasting 420,000 acres of the crop, up 43 percent from the 294,000 acres sown in 2006. The agency estimates that will generate 155,000 tonnes.
Schikowski said that’s not enough to meet consistent annual export requirements of 165,000 tonnes per year plus another 20,000 tonnes of domestic demand, leading him to speculate prices may rise to 20 cents before the end of the crop year.
He seeded a section on his farm to canaryseed this spring after a three-year hiatus.
Foster acknowledged that 433,000 acres is not enough meet expected demand.
But he noted buyers in Europe and Mexico, Canada’s two largest export markets, are already balking at prices that back off to 17 to 18 cents on the farm.
He doubts the kind of increase Schikowski is hoping for is in the cards, especially considering the increasing transportation costs and the strengthening Canadian dollar.
“As long as we have reasonably good growing conditions and a reasonably good yield, I don’t see the market taking off any time soon,” said Foster.
Schikowski pointed out that in an interview conducted this time last year, Foster was quoted saying the price wouldn’t reach 15 cents, but it has gone as high as 18 cents of late and he foresees it heading higher.
“The inventory is kind of manageable so there is no reason why it shouldn’t stay up in that neighbourhood unless growers get silly and just start hauling a whole bunch in,” he said.
Even at 17 cents, growers can make a decent profit off the crop if they can generate wheat-type yields, said Schikowski. That works out to $8.50 per bushel for a crop that has lower seed costs than wheat and reduced fertility requirements that can save farmers about $12 per acre.
Foster said last year he misjudged how low Mexican supplies had fallen. He hopes that next year at this time he’s not reflecting on prices that have risen to that 40 cent plateau because those kinds of prices are only good for the people who are on the right side of the market.
“I’ll tell you, I’ve seen it go that way on canary and that way on mustard and it can get pretty scary, pretty fast,” he said.
