Market analysts at Agriculture Canada see average grain prices across the board for 1998-99 moving 10 to 20 percent lower than the past year.
And they see durum prices diving 25 to 35 percent in the upcoming crop year, according to their latest outlook.
Canola prices have dropped because of large soybean crops in the United States, Brazil and Argentina, said oilseed analyst Chris Beckman.
“Canola is a price-follower and it just has to follow soybeans down,” he explained.
But strong vegetable oil markets will keep bidding brisk on canola, he said, both from crushers here and those abroad.
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He expects flax exports to rise too. But a large Canadian crop will end up hurting prices, he said.
“We figure people will want to sell it rather than store it.”
Drought and frost may impact oilseed yields and prices, but it’s too early to tell, said Beckman.
Farmers will produce about 200,000 tonnes more barley this year, but will export about 200,000 tonnes less than they did last year, said coarse grains analyst Duncan McKinnon.
He sees one of the smallest feed barley export programs in recent history at 700,000 tonnes.
The European Union has built up burdensome stocks of barley, and is expected to subsidize sales through the year.
McKinnon said prices at U.S. Pacific Northwest ports should continue to be around $107 per tonne, and may drop as low as $100 per tonne. It will be hard for the Canadian Wheat Board to attract feed barley at low world prices, he said.
“Farmers will do much better in the domestic market for 1998.”
Situation could change
But if Canada all but drops out of the international feed barley market, and the EU is left as the main source of world export supply, it may stop subsidizing, he said.
“If that happens, maybe Canada will get back into that market as well.”
Meanwhile, the domestic feed market should buy about the same amount as last year since cattle numbers have probably peaked for the next year or two, while hog numbers increase.
“We shouldn’t see any more feeding than in 1997-98,” said McKinnon.
For oats, he sees Canadian product getting a bigger piece of U.S. market share. A bigger crop here means good odds for a bigger supply of high quality oats that U.S. millers find attractive, said McKinnon.
“We think that Scandinavian oats into the U.S. will be a little lower,” he explained.
Other European countries will likely buy more Scandinavian oats, and Eastern European producers will grow a more normal crop, meaning fewer oats will travel across the Atlantic to the United States.
But if there’s too much supply in Europe, he warned some oats will be moved into the U.S. with help from subsidies. This would push all oats prices down, he said.
McKinnon thinks part of Canada’s increased supply of oats may end up in livestock feed bunks too.
“Depending on how the weather continues, we could feed more oats,” he said, explaining some farmers may cut oats for forage because of dry conditions.
Prices for all coarse grains, including barley and oats, have been pushed lower because of the gargantuan U.S. corn crop and stocks.
