It’s refreshing to see an analyst come up with actual price forecasts, rather than just dancing around all the issues.
What numbers should a producer pencil in for crop prices in the new crop year? That was the multibillion-dollar question for the thousands of producers attending Crop Production Week and the Western Canadian Crop Production Show in Saskatoon. Many of the presentations took a stab at answering that question.
Greg Kostal of Kostal Ag Consulting in Winnipeg was tasked at the canaryseed meeting with comparing canaryseed to competing cereals. Kostal actually ran through all the important grains, oilseeds and specialty crops giving his projection for next crop year’s price levels.
Other analysts will weigh in with their projections and they may not agree with Kostal. There will be much more detail on supply, demand and factors to watch. However, it’s refreshing to see an analyst come up with actual price forecasts, rather than just dancing around all the issues.
The first official new-crop price estimates from the Canadian Wheat Board for wheat, durum and barley won’t come out until the end of February. Looking at the world supply-and-demand picture, Kostal believes the spring wheat price projection will come in at around $5.25 a bushel as a net price to farmers. Durum has even more burdensome supplies, so Kostal is predicting a price of $5 a bushel.
Those price levels are similar to what we’re seeing in the current crop year. On malting barley, Kostal’s number is $3.75 a bushel, marginally higher than the expected price in the current crop year.
His number for oats is $2.75 a bushel, which should make oats reasonably attractive for those areas that can grow a good crop.
Kostal is predicting both canola and flax to be in the range of $9 a bushel. Both oilseeds have been hit with trade barriers. The flax industry in particular has been dragged through hell due to the discovery of trace amounts of a long-discontinued genetically modified flax variety.
Stringent testing protocols have been developed so that flax will again be accepted in Europe, our major customer for the crop. The industry is wrestling with whether to require the use of certified seed this spring in its efforts to get rid of the unwanted variety.
On canola, the Chinese have effectively stopped buying, pointing to a benign fungal disease called blackleg. Blackleg has always been detectable in Canadian canola and it’s never been a concern before.
As one longtime farmer at Crop Week observed, “You’d think China would have to either buy our potash or our canola.” However, the Chinese, being shrewd traders, are buying neither.
In the pulses, Kostal has peas at $6 a bushel and lentils at 22 cents a pound. That’s close to the current price for field peas, but his new-crop lentil prediction is down dramatically from the current lofty levels of around 38 cents a pound.
Everyone is predicting a big increase in lentil acreage. The only matter of debate is how far prices are going to drop. Even at 22 cents, lentils look good compared to other cropping options if you’re in a suitable region for growing the crop.
Kostal has new-crop canaryseed at 20 cents a pound and yellow mustard at 26 cents a pound. On both canaryseed and mustard, Saskatchewan is the world’s largest exporter, so how much we grow has a big influence on prices.
Market analysis is a difficult game because a hundred things could happen to change the outlook, and usually something unforeseen does happen. However, Kostal’s numbers look like a good starting point for cropping budgets.
Kevin Hursh is a consulting agrologist and farmer based in
Saskatoon. He can be reached at [email protected]