Canaryseed supplies are unusually tight this year, but that doesn’t mean prairie producers will be rushing to put in more acres this spring.
An industry analyst with Mercantile Consulting Venture Inc. in Winnipeg says that’s because other crops, including wheat, barley, canola and lentils, are all promising better returns and better margins.
Unless canaryseed buyers respond with higher prices and favourable production contracts, seed production could fall short of demand again in 2011.
“There is a lot of competition for your acres this year and I really urge producers not to underestimate the amount of competition you will have,” Marlene Boersch told the Canaryseed Development Commission of Saskatchewan meeting held during Crop Production Week in Saskatoon.
Read Also
Interest in biological crop inputs continues to grow
It was only a few years ago that interest in alternative methods such as biologicals to boost a crop’s nutrient…
“We have all kind of crops out there that are showing very, very good returns, so you should be picky and choosy on how you support the canaryseed industry,” she said.
“Make sure you are getting paid and make sure you are getting some good pricing opportunities because you have the power right now. It’s no longer a supply driven market. It’s a demand driven market.”
Boersch said tight canaryseed supplies should drive birdseed prices higher in 2011.
Canada is the world’s largest producer of canaryseed, but Canadian farmers have produced unusually small crops in the last two years.
They harvested 316,000 acres in 2009 and planted 435,000 acres last year, although almost a quarter of the crop was abandoned because of weather-related production problems.
As a result, production over the past two years averaged 137,000 tonnes a year.
Canadian production averaged more than 200,000 tonnes a year from 2004 to 2008, and the reduction has had a predictable impact on Canadian and world stocks.
Canadian carry-out stocks are expected to fall to 15,000 tonnes by the end of the 2010-11 crop year, down from a high of 190,000 tonnes five years earlier.
During the same period, the stocks-to-use ratio dropped to eight or nine percent from a high of 93 percent.
“The 2010 crop is certainly not going to be a very big crop … and I think that this year, we actually won’t be able to feed all the demand with such a small crop,” Boersch said.
“Production and supply are becoming much, much closer to each other and that’s because we are eating away at the carryout. Overall, the carryout is not going to be big at the end of this year so the price … going forward will reflect that.”
In a normal year, Canada exports more canaryseed than all other countries combined.
World demand has been decreasing over the past three years, especially since 2008 when world food prices began to increase.
But canaryseed production has also been decreasing and producers in other countries have not stepped in to make up for the shortfall.
Canada is still the dominant player but 2011 acreage could see further declines because of potentially higher net returns from major grain and oilseed crops.
According to Boersch’s estimates, projected margins on canaryseed will be $80 to $90 per acre, compared with $172 for lentils, $162 for canola, $151 for barley, $103 for flax, $94 for oats and $217 for spring wheat.
Boersch said producers still marketing canaryseed should target a price of $30 per hundredweight and hold as much as 25 percent of their crop to see how markets respond.
For new crop, they should weigh their options carefully.
Prairie farmers are likely to plant an undersized crop again in 2011 if gross returns don’t pencil out to $400 per acre, she said.
Contract opportunities have been spotty this winter but cash prices have been edging up to 28 cents a pound.
“Canada is a major player so you can be a price setter, you don’t have to be a price taker,” Boersch said.
“They (buyers) have to reach out if they want you to fix the acreage because you do have a lot of options this year.”
———
In 000 tonnes unless otherwise stated:2007-08 2008-09 2009-10 2010-11*
Seeded area (000 acres)Harvested area (000 acres)Production440430162415405197316316142435**320
111
———
Domestic use
ExportsCarry-out stocksStocks to use ratio232045625%251537542%201815130%2013012
8%
