Low stocks save rye prices from bumper crop

Statistics Canada expects 431,000 tonnes of production, which would be close to the biggest crop in three decades

North American farmers harvested a big crop of rye but it won’t overwhelm the market, say industry officials.

“The feeling on inventory by the industry is that it is really at all-time lows,” said Herman Wehrle, director of commercialization and market development with FP Genetics.

Statistics Canada is forecasting 431,000 tonnes of Canadian production, which would be close to the biggest crop in three decades.

The U.S. Department of Agriculture pegs the U.S. crop at 293,000 tonnes, which is also one of the largest in 30 years.

But Wehrle doesn’t anticipate an oversupply of the commodity due to poor crops the past couple of years.

“Our feeling is that we certainly won’t be building inventories,” he said.

“There’s certainly going to be ample product available but I don’t think the supply in itself is burdensome.”

That is despite slumping demand from the food side of the business.

Claus Nymand, product manager for hybrid rye in North America for KWS Cereals, said rye bread is mostly consumed in restaurants and hotels rather than at home, so COVID-19 has hurt demand for that product.

“The milling market has gone down for rye flour during the COVID period,” he said.

The pandemic has also hurt demand from the distilling industry as some distilleries switched from producing whiskey to hand sanitizer, which is made from corn rather than rye.

Beth Stebbins, small grains procurement manager for Grain Millers, painted a slightly different picture of the supply side than Wehrle.

“I could buy up everything I’d want and more at the drop of a hat right now, so there’s definitely a lot out there,” she said.

The problem is that the bakers and other companies that Grain Millers supplies with rye flour are being non-committal.

“We’re kind of sitting tight and waiting and seeing what demand is,” said Stebbins.

She thinks growers are producing more of the crop in the U.S. because they are tired of the corn/soybean rotation. There has also been a tireless promotional campaign by the breeders and retailers of hybrid rye.

“They’ve done a phenomenal job on that,” said Stebbins.

Nymand expects a lot of this year’s rye production will be directed to the feed sector, which is a market KWS and FP Genetics are attempting to develop.

“Hopefully, both the feed market and the farmer sees the potential there,” he said.

Wehrle estimates half of Western Canada’s rye crop is typically sold into the food market, 45 percent is used as feed and five percent goes to the ethanol industry.

He said the new hybrid rye varieties developed by KWS and marketed by FP Genetics have changed the economics of the crop.

Wehrle believes hybrids now comprise about half of the 250,000 acres planted to rye in Canada every year.

He said the vastly improved yields have made it possible for the economics to work selling rye into the feed market, which is done at a price discount compared to the food market.

Growers can now get yields of 100 bushels per acre when growing the crop on good land rather than half that amount when producing open pollinated varieties on marginal land.

“The value is really locked up in the yield side of things,” said Wehrle.

Farmers can now generate $500 per acre growing hybrid rye, which is competitive with many other crops.

He said research shows rye can be fed to cattle and hogs at up to a 50 percent inclusion rate with no impact on feed efficiency, feed intake, average daily gain or carcass quality.

But North America’s livestock producers have been far more reluctant to use the ingredient compared to Europeans.

“As we move forward with hybrid rye, our expectation would be that it will be used quite a bit more in the feed markets,” said Wehrle.

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