“No one wants to take a long position.”
– HARVEY FENSKE, VITERRA
Everything is in place for the 2009 edible bean crop except one thing: production contracts. They’re unusually late this year.
Typically, bean buyers begin issuing contracts around mid-January. But as of last week, contracts for the 2009 edible bean crop were only rumours.
Without price discovery, Manitoba growers are in limbo as they wait to decide if they will plant beans this year or not.
“It’s frustrating waiting,” admitted Todd Stewart, who farms at High Bluff. “You have more confidence in future prices if you get an early contract.”
Other producers have had no better luck. Anyone asked “Got a contract yet?” during last week’s Manitoba Special Crops Symposium in Winnipeg invariably said no.
Stewart, who heads the Manitoba Pulse Growers Association, said some producers last year decided not to wait and switched to other high-value crops, such as corn. Dry bean acreage in the province slumped by 40,000 acres as a result.
Companies purchasing edible beans would like to issue contracts. But end-users – canners and packagers – are spooked by volatile prices resulting from the global economic upheaval.
As a result, companies are
operating “hand to mouth” and buying only as needed, said Harvey Fenske, a senior field superintendent with Viterra.
“No one wants to take a long position,” Fenske said.
There are signs the log jam may be about to break. Alvin Klassen, a buyer with Roy Legumex, reported hearing that a major U. S. bean canner had just announced three-year contracts for navy beans with “respectable” prices.
Multi-year contracts used to be common but lost favour with end-users in recent years. A return to them now could signal that users are nervous about stocks, Klassen said.
But until end-users become more clear about their intentions, processors and merchandisers who buy from producers can’t do anything, said Fenske.
“We don’t have any control,” he said. “We’re waiting for them to come to us.”
Spot prices last week for old-crop deliveries were running at around 26 cents a pound for navy beans, 32 cents for pintos and 36 cents for black beans.
Fenske said navies last year at this time were fetching “exceptional” prices of 40 cents a pound. Late contracts to ensure adequate acreage ran even higher, creating resentment among producers who signed up previously.
Bruce Brolley, a Manitoba Agriculture, Food and Rural Initiatives pulse crop specialist, said price discovery for edible beans will become much better as soon as contract announcements begin.
“Once you get the first contracts coming out, everyone else will come to the table,” he said.
In the meantime, Brolley advised growers to leave their bean land open and not to move it to lower-value crops just yet.
“You don’t want to put that land to wheat.”
Klassen also advised caution, saying producers should be careful about switching too quickly from beans to other high-value crops, such as corn and sunflowers.
He noted that beans came off the fields at a normal time in 2008, while cool, damp weather delayed the corn harvest until late in the fall.
“That will deter guys from growing too much corn this year.”
Klassen said North American seed supplies are tight, except for navies, which should be positive for prices when they do come out.
“Stick to your rotation. Stick to your plan. This is not the time to chase the market.” [email protected]