Canadian and American producers are expected to plant fewer beans this year, despite strong demand for the crop
Dan Sturt thinks Agriculture Canada’s 2021 dry bean acreage estimate is about right.
The government is forecasting that Canadian farmers will plant 395,200 acres of the crop this spring, a 13.5 percent drop from last year.
Sturt, who is a dry bean broker with DW Sturt & Co. in Michigan, said he anticipates a similar 15 to 20 percent decline in the United States.
That is due to intense acreage competition from other crops rather than a lack of demand for the commodity.
There has been a strong pull out of Latin America for Canadian and U.S. beans this year.
Mexico had a poor crop due to a combination of drought and frost damage. They were short about three million bags of pintos and 1.5 million bags of black beans, said Sturt.
“We should continue to see good demand from Mexico probably through the summer.”
Mexico is in the midst of harvesting its yellow beans, which can be used as a substitute for pinto beans when the price is right.
But the price is not right. A shortage of the crop has driven prices to historic highs of around US$2,300 per tonne, according to an article published on the Global Pulse Confederation’s website.
Farmers in the state of Sinaloa will likely harvest 117,000 tonnes of the crop. That is up from last year’s dismal 95,929 tonnes but well below the previous five-year average.
The other main factor contributing to robust demand for U.S. and Canadian beans is that Argentina and China have run out of black beans for export.
China’s bean production has been declining the past five years as the Chinese government actively promotes increased soybean and corn plantings.
“This past year’s (production) is really, really low, and it’s going to continue to stay low,” said Sturt.
Argentina has run out of exportable supplies and won’t be replenishing that until the new crop is harvested in June. There are rumours that farmers in that country are planting an average crop of black beans.
That means that the U.S. and Canada will have another five months to continue supplying markets like Venezuela, Costa Rica, Guatemala, Cuba and Brazil.
Carryout in Canada and the U.S. is going to be far lower than the market originally anticipated. It is expected to be historically low on blacks and navies, although slightly above normal for pintos, said Sturt.
Supplies should still be adequate to carry the market through until the new crop harvest unless U.S. and Canadian acres drop by something like 30 to 40 percent, which could lead to some panic buying of old crop beans.
New crop supplies will likely be tight, resulting in U.S. prices in the high 20-cents or low-30 cents per pound range. However, if the acreage cuts are severe, prices could climb to today’s levels.
Sturt thinks a lot of growers probably won’t contract production this year with the expectation that prices could drift higher.
“I think they’ll still plant the beans because they think there’s going to be a shortage, so why not plant them as sort of a casino crop?” he said.