Canaryseed markets are violating the law, specifically the law of supply and demand.
Total Canadian supplies are expected to be down by 13 percent in 2009-10, exports will be down slightly and year-end carryout stocks are forecast to be down by 28 percent.
On top of all that, about 40 percent of the 2009 crop was still in the fields as of last week, adding to the uncertainty about supply.
All that should lead to higher prices, yet markets have been flat and are forecast to be lower than last year.
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Analyst Larry Weber of Weber Commodities Ltd. in Saskatoon said that based on market fundamentals, there’s no reason for canaryseed prices to go down this year.
“We supply 80 to 85 percent of the world market, and if we have a problem with the crop here in Saskatchewan, there’s no way the price should go down,” he said.
“It goes against every supply-demand model you could ever find.”
Prices should be going up, he said, but seem to be stuck at 17 to 19 cents a lb., a little under $10 a bushel.
Prices have ranged from 16 to 32 cents a lb. over the past three crop years.
In its latest market outlook, Agriculture Canada projected the average price in 2009-10 will be down by five or six percent from last year.
That same outlook projects 2009 production of 145,000 tonnes (down from 196,000 the previous year), total supply of 228,000 tonnes (261,000), exports of 145,000 tonnes (153,000) and carryout stocks of 60,000 tonnes (83,000).
Weber said if a significant portion of the crop remains out for the winter, that could reduce available supplies even further and significantly affect prices.
“If we don’t get that off, we’re going to be short canaryseed,” he said.
“I wouldn’t be selling any until it becomes clear whether they’re going to get that harvested.”
The good news is that canaryseed has a hard, thick husk and is impervious to the weathering that affects other crops.
“You can leave it out all winter and combine in the spring and it shouldn’t be downgraded,” said canaryseed grower Kurtis Nunweiler of Elrose, Sask., adding farmers will often leave their canaryseed to the last if there are other crops waiting to be combined.
Nunweiler said he’s surprised and disappointed that prices haven’t moved up.
“I guess demand is just down right now, but hopefully that will change,” he said.
Canaryseed is a relatively low-input crop, so farmers can make a profit at current prices, depending on their yields.
Market watcher Brian Clancy of Stat Publishing said he expects most of the crop will be taken off this fall.
“If some isn’t harvested, that will be positive for price,” he said.
Clancy thinks year-end stocks could dip as low as 43,000 tonnes, based on his view that exports will be 163,000 tonnes, compared to the Agriculture Canada forecast of 145,000. That’s still at the low end of the previous five-year average.
He said one reason prices may not be reacting more strongly to the prospect of short supplies is that buyers may still be using up inventories built from two years ago, when exports totalled 204,000 tonnes.
For some special crops, including canaryseed, Canada is the world’s dominant supplier and trader and crop developments here can move world prices.
If farmers don’t want to sell at a certain price, buyers will have no choice but to bid higher.
“People don’t quit feeding their birds,” Weber said.
The main export buyers are Europe, Mexico and South America, each with about 30 percent of the market.
