A rising tide raises all boats, even dinghies.
Rye, a relatively tiny crop with a tiny market, has floated upward on the same tide that has boosted prices for all grains in North America – U.S. corn.
“Last fall I didn’t think there was a lot of upside in the market. Then when the corn market exploded, everything went with it,” said Cal Vandaele of Vandaele Seeds in Medora, Man.
Even though about half of the rye crop, which averages 250,000 to 300,000 tonnes, is sold for domestic human consumption and export, the red hot feed market has overwhelmed any other factors.
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“The feed market has definitely been the driver,” said Vandaele, who calls himself the “rye guy” on the company’s website.
Rye has recently been trading in the range of $3 to $3.50 a bushel, compared with last fall’s $2.25 to $2.50.
Feed rye delivered to Alberta is fetching $3.70 to $4 a bu. (less transportation costs, about $1 a bu. from Manitoba). The milling market has seen bids in the range of $3 to $3.50 in the last couple of months.
Vandaele said that with rye acreage declining by at least 10 percent last fall and carryout stocks falling, price prospects for the coming year look good.
“Based on a lower acreage combined with the carryover, we expect prices to remain stable,” he said, while cautioning the entire grain market could soften somewhat over the spring and summer.
Agriculture Canada’s latest market outlook projects the 2006-07 price for No. 1 Canada Western rye, basis Saskatoon, will average $2.80 a bu., well above the 2005-06 average of $2.05.
Analyst Joe Wang said the department is expecting 2006-07 exports of about 145,000 tonnes and total domestic consumption of 210,000 tonnes, including 48,000 tonnes of food and industrial use.
Carryout stocks at July 31, 2007, are forecast to be 120,000 tonnes, down from 170,000 a year earlier.
A more immediate issue for rye growers is how the crop will come through the winter.
Vandaele said he’s expecting it to be in good shape, based on reasonable moisture levels and adequate snow cover in most rye growing areas in Manitoba and Saskatchewan.
Jake Davidson, executive manager of Winter Cereals Canada, said there are some concerns in areas that experienced a rapid melt in early March, followed by cold weather.
“If the plant comes out of dormancy and then goes through some freeze-thaw cycles, that can cause what I like to call springkill,” he said.
“The next couple of weeks will make the difference in the survival rate.”
Looking to the fall of 2007, Vandaele said rye acreage could increase, especially if prices stay near $3 a bu., other grain prices remain stable and nitrogen prices remain high.
“At $3 it can be a profitable crop to grow if you get reasonably good yields, and keep your input costs low,” he said, adding rye generally requires less fertilizer, and seed and chemical costs are lower than for most other crops.
