It wasn’t many years ago when the grain market could be categorized as the good, the bad and the ugly with most commodities in the last two categories. Based on the market outlook presentations at the recent Crop Production Week in Saskatoon, the appropriate categories for 2011 are not so good, good and really good.
Malting barley and mustard are in the not-so-good category.
New mustard crop contract prices are available at 30 cents per pound for yellow mustard and around 25 cents a pound for brown and oriental mustard.
Those are not appealing price levels. Many of the producers who grow mustard in 2011 will be planning to store a lot of it for when carry-over drops and prices improve.
Malting barley is another disappointment, but in this case the price seems to be defying market fundamentals. Bruce Burnett, the director of weather and market analysis for the Canadian Wheat Board says there’s a shortage of malting barley due to quality problems here in Western Canada and in Australia.
You’d think malting companies would be offering attractive new-crop malting barley prices through the CWB’s Cash Plus program in order to assure a supply. For whatever reason, that hasn’t happened. Without some positive market signals, barley acreage is going to drop even further.
The CWB’s new-crop price estimates won’t come out until late February, but based on American futures prices, wheat should be in the good category. And Bruce Burnett says durum is about to re-establish its traditional premium over spring wheat.
Wheat and durum are likely to be popular, pulling seeded acreage from other crops that also have pretty good price prospects, including lentils, peas and canaryseed.
Speaking at Pulse Days, Chuck Penner of Leftfield Commodity Research predicted new-crop pea prices will improve to $7 to $8 a bushel for yellows and $8 to $9 for greens. He says weird weather would add upside potential, but he still believes pea acreage will drop.
Marlene Boersch of Mercantile Consulting Venture says minor acreage crops like canaryseed need to be competitive with other cropping options. Canaryseed prices strengthened last week as Canadian exporters finally regained some market access into Mexico. Old-crop prices are now being quoted as high as 30 cents a pound and there are some new-crop contracts available at 24 cents.
While that’s a good starting point for new-crop canaryseed, everything is being compared to canola which is in the really good category. Old-crop canola has been selling for around $13 a bushel and new crop can be contracted for around $11. Analysts believe prices are likely to go even higher.
Flax is also in the really good category with analysts like Chuck Penner predicting prices of $12 to $14 a bushel for the upcoming crop.
While flax acres are expected to increase a bit, canola acreage will be huge. Canola will be the first choice on land too wet to seed in 2010 and there will be more acres of canola in the nontraditional southern regions of the Prairies.
Marlene Boersch points out that many cropping options should provide a gross return of $400 an acre in the year ahead. Acreage will gravitate to the crops that promise those high returns.
Kevin Hursh is a consulting agrologist and farmer based in
Saskatoon. He can be reached at [email protected]