Farmers don’t have the usual price signals to rely on when making 2005 spring planting decisions for pulse and special crops, says a market analyst.
New crop contracts were scarce at this year’s Crop Production Week in Saskatoon, an event that usually acts as a launching pad for deals between special crop buyers and sellers.
Exporters are still stinging from 2004, when a poor quality harvest left them scrambling to live up to their commitments with overseas buyers, said Saskatoon commodity broker Merv Berscheid.
With that unpleasant memory in the back of their minds and huge supplies of current crop peas and lentils at their disposal, grain companies and processors are in no hurry to book supplies for the 2005-06 marketing year.
Read Also
Russian pulse trouble reports denied
Russia’s pulse crop will be larger than last year, which won’t help prices rally from their doldrums.
“Why put yourself at risk when there is no need to right now,” said Berscheid, a CGF Brokerage and Consulting broker.
Many in the trade are predicting a sizable increase in lentil acreage for the coming year, which further limits the need to contract production.
The only exception is red lentils where there is strong global demand and limited domestic supply. That was the only pulse contract making the rounds at Pulse Days, with some companies offering 16 cents per pound for No. 2 or better product delivered at plant.
Peas are no different.
With lots of crop in the countryside and 2005 seeded acreage expected to be similar to 2004 levels, farmers may not see price signals until just before spring, said Berscheid.
“We might see some contract prices on peas but they won’t be pretty prices.”
Rising ocean freight rates and the strengthening Canadian dollar haven’t helped matters. Those two factors have added to exporter uncertainty by tightening profit margins so that a slight fluctuation in either can render a grower contract unprofitable in a hurry.
“It doesn’t take much of a movement and you’re offside,” said Berscheid.
With few new crop prices to guide them, special crops growers will have to rely on other factors when making their planting decisions.
In light of poor current prices for most commodities, it may be a year to employ a strategy of minimizing losses rather than maximizing gains, said Berscheid.
His advice is to stick with rotations and plant what grows best on each individual field. If farmers need additional information, they should look to historical average crop prices and current supply and demand dynamics.
Agriculture Canada recently released a world outlook for pulses that may be helpful.
The agency expects a four percent decline in world pea production in 2005-06, with a 14 percent drop in Canadian production due to lower yields being partially offset by larger crops in Ukraine and the United States.
Average pea prices are expected to be similar to 2004-05 levels with stronger demand offsetting a three percent increase in total supply due to high carry-in stocks.
World lentil production is expected to fall eight percent with decreased acreage forecast in three key regions Ñ Canada, Turkey and India.
The agency predicts a five percent decline in Canadian seeded area, which contradicts what many in the trade believe will be a larger Canadian lentil crop. Average prices are expected to increase with one notable exception.
“For the top grades, I can see them coming down, especially for the greens,” said Agriculture Canada special crops analyst Stan Skrypetz.
Dry bean prices are heavily influenced by American production. Skrypetz expects U.S. bean acreage to rise 30 percent in the coming crop year, while Canada’s will grow by half that amount because the stronger Canadian dollar has dulled the impact of record U.S. bean prices.
Skrypetz expects a slight increase in top grade desi chickpea prices because they have been depressed for a long time and it looks as though India will harvest a 2004-05 crop about 500,000 tonnes smaller than the previous one.
The prospect for the 2005-06 Indian crop is also poor due to depleted soil moisture reserves.
“If the production starts coming down, especially in India, that should kind of strengthen the prices later in the crop year,” said the analyst.
Prices for top grade kabulis are expected to fall because the bulk of the anticipated 15 percent increase in Canadian chickpea acreage will be kabulis, which are fetching good prices now.
