New-crop organic grain markets are forecast to remain fairly static, according to a cross-section of industry pundits.
Barring a late-season widespread harvest disaster, there should be no dramatic upward or downward price swings for the main crops grown in Canada.
“There’s nothing on the horizon that we can see right now that would cause us concern either way,” said Dag Falck, organic program manager for Nature’s Path Foods Inc., North America’s largest manufacturer of organic cereals.
If the remaining crop comes off in decent shape in northeastern Saskatchewan, there will be ample supply to meet the steady demand for organics.
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The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
“We don’t anticipate that there is going to be any major changes in pricing,” said Falck.
Mark Gimby, grain buyer for Growers International Organic Sales Inc., one of Western Canada’s largest organic grain merchants, said it is shaping up to be a good harvest in Saskatchewan, where an estimated 70 percent of organic crops are grown.
It is a little early to be making definitive predictions because while harvest has wrapped up in southern Saskatchewan, it has just begun in many parts of the northeast. But judging by early reports and preliminary samples, yields are way up and crop quality looks at least average, a vast improvement over last year’s results.
Gimby said markets continue to be robust but there are two factors that will contain prices: rising fuel costs, which are driving up freight rates; and the Canadian dollar, which has gained ground on the euro and the U.S. dollar, currencies of the two major markets for Canadian organics.
“I would say it’s probably going to be a tougher year for farmers. There’s a bump up in cost but not necessarily a pump up in prices,” he said.
Jason Freeman, sales manager for Farmer Direct Co-operative Ltd., the marketing arm for 60 certified organic operations, had a different take on how that scenario will play out.
He figured buyers will absorb the extra costs in an effort to attract enough grain to meet the burgeoning demand for organics. They can’t afford to disrupt their busy production schedules waiting for farmers to deliver.
“It’s not like conventional farming where (producers) just take whatever (price) they can get. Guys will say no and keep the stuff in their bins.”
Freeman expects farmgate prices for most of the major crops to be consistent with last year’s offerings. The only exception will be lentils, which have taken a hit due to overproduction.
Flax had been one of the hottest commodities for organic growers in recent years but that market seems cooler with the influx of cheap exports from other production regions.
“South America is now beating China at their own game. They’re undercutting China into the European market,” said Freeman.
While European flax markets are being pressured by the cheap imports, good quality brown flax is fetching $25 per bushel in North America where crushers seem to prefer locally grown product.
Falck said flax prices swung back to more normal levels last year after being on fire for two years and he is looking for that trend to continue. He expects the 2005 crop to rival last year’s harvest unless what is still standing in the fields is wiped out by frost or a bout of wet weather.
Gimby said while there’s a large carryover of poor quality wheat from last year, there should be some blending opportunities with the 2005 crop as long as it meets buyer specifications.
“There’s a really nice crop coming in for the most part,” he said.
Freeman said organic feed wheat prices are not where his members would like to see them, but with strengthening U.S. feed markets it could come up 50 cents per bu. if farmers can wait it out.
“The prices aren’t the greatest but I think they will come back up,” he said.
