Mediocre year as farmers hope for better in 2019

By Tim Kalinowski

Farmers in Alberta are coming off a so-so year price-wise, says Neil Blue, a provincial crop market analyst with Alberta Agriculture and Forestry, and might see much of the same coming into 2019.

“It has been nothing spectacular,” states Blue. “There wasn’t whole lot of market excitement during the year. And there has been nothing really outstanding in terms of potential crops for next year … Things did move a little bit, depending on the crop, as far as price goes.

“For example, canola peaked as it often does in the springtime in the month of May. And since then, cash prices have fallen off about $1.00 to $1.50 a bushel. We are seeing canola in the $10.00-$10.50 range.”

Milling wheat prices have also been stubbornly fixed in a specific range for months now, says Blue.

“It (milling wheat) has shown about  $30 a tonne range, or about $0.75 a bushel in the last few months— within a a sideways range,” states Blue.

“We didn’t see the spike we saw back in July 2017 on milling wheat. It’s just sort of sitting there. We have had worse, and it is not earth-shaking prices. It’s probably $6.50 to $7.00 a bushel for good quality milling wheat.”

Pea prices have never really recovered from high tariffs imposed by India in 2017, says Blue, despite China picking up the slack somewhat in those markets. But there is a bit of silver lining on that front, he confirms.

“Feeders have realized peas provide a good source of protein and energy, and they are now being bought up for use in supplementary cattle feed, and that has moved the market a bit.”

In fact, feed grain has been a good news story for most 2018 so far, says Blue, but he adds a cautionary note to this surprisingly positive narrative.

“One thing that has continued until up to at least recently is fairly strong feed grain prices; in fact almost as strong as the higher-use prices,” he explains. “Feed barley strengthened during the winter in its price and continued fairly strong during the summer. It is only in September we have seen some weakness in feed wheat and feed barley prices.

“That weakness is really because of new imports of corn and the weather we are having for potential downgrading of some higher quality crops to feed value.”

Soybeans have tanked since the United States chose to escalate its trade war with China over the past year, Blue confirms; although not as badly for Canadian producers overall.

Soybeans are sitting at about $8.00 to $8.50 a bushel in the market right now. Not horrible, but not fantastic either, he says. However, Blue is extremely concerned about growing signs of weakness in the soybean crush market, and other crush markets as well.

“The U.S./ China trade dispute has spilled over into our crops to some extent, particularly on canola oil. The biggest impact has been on crush margins.

“In other words, the value of oil and meal from canola has fallen off along with the drop in the U.S. soybean price … That is a bit of a concern to see if crushers will back off a bit on crushing if these margins remain as low as they are now.”

The ongoing drought situation in southern Alberta has also taken its toll— particularly on hay supply and hay markets. Hay yields are down in several parts of Alberta anywhere from a third to as much as a half, forcing farmers to pay higher prices for what is out there or seek alternative feed substitutes to lower their costs.

That goes hand-in-hand with that surprising strength in the feed grains market, says Blue.

“Farmers are resilient and try to make that up by baling a lot of straw and using substitute feed grains, as much as they can do, to be able to feed cows and keep the herd size without too much culling.”

However, late harvests up north, and deteriorating crop conditions there as a result, could put a drag on the entire feed market once crops are in the bins this fall, cautions Blue.

“It certainly could cap the feed prices,” he says.