The fall rye crop came out of the winter looking healthy and is enjoying all the spring moisture.
That leaves rye growers in the familiar conundrum: good crops mean falling prices.
“If the crop is as large as they say it is going to be, a lot of rye will have to go for feed,” said Jeff Kozak, a grain buyer for Alberta Distillers in Calgary.
This crop year any farmer with a good quality rye crop in the bin was able to get between $4 and $4.75 (delivered) per bushel from Alberta Distillers. But in September prices are likely to drop to $3-$3.50 per bu., Kozak said.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
Agricore United rye merchant Jeff Mayo said elevator prices for rye this past fall and winter made producers happy.
“Anyone who got on the $5 a bu. train made money,” said Mayo.
But few farmers were lucky enough to capture the high prices, Mayo said, because prices rose only because most of the prairie crop was ruined by harvest-time rain. The problem was so widespread across the Prairies that one major miller in the United States refused to buy Canadian rye this winter, Mayo said.
Instead, some brought in European rye. Kozak said he doubts the Americans will continue to do that because the European product had quality problems with the falling number – the same problem for which they were rejecting Canadian rye.
Autumn prices are likely to drop because a much bigger rye crop will probably be produced this summer, Kozak said.
Agriculture Canada has forecast prairie rye production will more than double in 2003-04, to 290,000 tonnes from last summer’s drought-reduced 134,000 tonnes. Harvested area may increase to 328,510 acres this autumn from 190,200 acres last fall.
Mayo expects to see 2003 prices at about $3 per bu. for milling rye and $1.50-$2 for feed rye. This winter, feed rye sold for about $3.
But while prices are expected to drop, some demand that was driven away last winter will return to the market. Kozak said his company couldn’t find enough quality rye this winter and had to switch to U.S. corn. If a big rye crop is produced, Alberta Distillers will return to rye.
“We hope to go back to 100 percent rye,” said Kozak, whose plant was designed specifically for rye-based alcohol production.
At one time rye was a million acre crop and a major prairie commodity, but in recent years it has shrunk. Rye sold for feed does not tend to be as profitable as other feed crops, and its milling and distilling markets are smaller than the higher value markets for other grains.
Mayo said so little rye moves through the grain handling system that it has become like a special crop.
“It is very difficult to work with because you are handling such a small volume and it’s very difficult to bring it into your facility and keep it for a long time,” said Mayo.
“You don’t want to tie up a lot of bin space, because it’s rare that you can ever find enough to fill a 900 or 1,000 tonne bin in any one area at any one time.”
Kozak said his company, which buys about 1.5 million bushels (40,000 tonnes) of rye per year when it is able to do so, may bring in supplies from as far away as Saskatoon and southwestern Manitoba.
The export market ranges from 60,000-80,000 tonnes per year, Kozak said.
He said he was skeptical of Agriculture Canada’s production number because he thinks many producers are not growing the crop to sell, but rather as a defensive cover crop.
“I think some guys were just putting something in so that if there was another drought they’d have some land left – it wouldn’t all blow away,” said Kozak.
