New Beginnings: Signs mostly positive for Canadian agriculture at start of 2019
By Tim Kalinowski
While 2019 is barely underway, farmers across southern Alberta and Saskatchewan are already preparing for the crop year ahead.
According to Alberta provincial crop market analyst, Neil Blue, there is a lot more cause for cautious optimism this year than what farmers experienced in early 2018.
“I’m optimistic this year,” states Blue. “I would say there is a positive trend for Canadian farmers and it is looking reasonably good for the coming spring and summer. All we need is the weather to co-operate.”
Leading the charge for that optimism is ongoing strength in wheat exports, says Blue.
“The wheat market has been improved,” he says. “It is not spectacular, but it is improved. The basis levels are better than they were a year and half ago, and delivery opportunities are markedly higher than a year ago to this point— probably about two million tonnes higher. And our exports are up by about four million tonnes. That relative ease of movement, along with better prices that wheat is commanding both on the milling side and on feed wheat, will probably result in higher wheat acres this coming year.”
Blue says milling wheat is averaging about $7.50 a bushel at the moment and feed is getting prices between $5.50 and $6.50 a bushel
Another Steady Eddie as far as Canadian agriculture is concerned is good strength in barley prices relative to historical averages.
“Barley continues to be strong,” states Blue. “Last year the acreage was slightly higher, but we really didn’t have a strong yield on barley, and then we had some harvest difficulties. But a lot of the malting barley in the malting areas was taken off before the tough weather we had in September, and so there is reasonably good supplies of malting barley. The price of malting barley is still commanding a premium to feed barley. That being said, feed barley prices have continued their strength all the way from last winter, all the way through the summer, and into this current timeframe. I think we will see more interest in barley and an acreage increase.”
Barley prices vary depending on region, says Blue, but in Lethbridge country and the south the best prices are available. Feed barley there is commanding $4.50-$5.50 per bushel.
If wheat and barley are the patient work horses of Canadian agriculture so far this year, says Blue canola continues to be thoroughbred of cash crops.
“The price has been hovering around the $10.00-10.75 level (per bushel),” states Blue. “There will be continued interest in growing canola because it is an easy crop to market usually. The reason I say usually is that one problem this year has been higher green seed in our canola, and that has posed a challenge to some producers in those circumstances. It’s finding it’s way into the marketplace, however. At discounted prices, but it is finding outlets in the markets, mainly domestically.
“The price at over $10.00 per bushel is still good from an historic point-of-view, and that is going to continue to attract acres to canola.”
And there are other reasons to believe canola is still a good bet for continued profitability in 2019, says Blue.
“Another positive on canola is canola oil has increased its premium to other competing oils such a soybean and palm oil over the last few months,” Blue explains, “and that has helped to keep the price of canola supported. And it has kept the crushers here quite interested in continuing their crushing of canola.”
There is one potential fly in the ointment this year when it comes to canola, admits Blue— recent tension in the Canada-China relationship.
“There is a concern,” he acknowledges, “but so far we haven’t really seen the influence with this arrest of the CFO of Huawei on the markets. That could still take a turn for the worse if the CFO gets extradited to the United States, and so Canada is kind of caught in the middle on this. But, so far, we haven’t seen an effect on the grain markets that way. China is still a big importer of canola, as is Japan, and somewhat less so the U.S.”
Other crops with huge upsides in terms of dollar value per acre are flax and faba beans, says Blue, but both come with greater marketing challenges than canola overall.
“Flax was a bit of a flier last year, but it did turn out pretty well,” he says. “Acres did not jump that much, but we do have fairly tight supplies of flax, and exports have been somewhat lacklustre— but nonetheless flax prices have been in that $11.50-$12.50 per bushel range.”
“Faba beans are as high as $9-$10.50 a bushel in some areas,” says Blue. “It has had some production challenges at times in terms of having it mature, and also some harvest problems. It’s another relatively new crop that continues to have some acres within Alberta, and again offers an alternative for rotations.”
Between flax or faba beans, Blue feels faba beans may have the greater upside at the moment.
“Demand is fairly good, and it is fairly easy to market because it is a legume and has several market outlets,” he explains. “There are two basic varieties: there is beans produced for a human consumption market that is mainly for export, and then there is an animal feed variety for the feed market. There is some versatility there, and to a certain extent the human consumption type can go into feed in a limited way.”
Feed prices for faba beans are also pretty good at the moment, confirms Blue, as with most feed crops, due to ongoing demand in drought-hit areas. It’s going for between that $5.50 and $6.50 per bushel range, and is considered a high source of protein.
But for those looking for a bit more market familiarity, Blue says green peas and yellow peas are seeing a price rebound even with markets still closed in India. Feed markets, strengthening exports and the potential for India to allow increased imports this year due to domestic rainfall shortages gives peas a certain buzz at the moment, says Blue.
Yellow peas are averaging about $7 to $7.50 a bushel to start the year, and green peas are hovering in that $9 to $10 per bushel range.
And, says Blue, soybeans continue to be an attractive option to think about for some farmers this year because of increasing exports and decent prices. Soybeans are selling for about $10 a bushel at the moment.
“One thing that continues to be important is the relatively weak Canadian dollar,” explains Blue. “The weakness in the Canadian dollar relative to the U.S. dollar has certainly helped us in our crop prices generally relative to those farmers in the U.S. With their trade difficulties down there, we have probably gained a little bit from that. We have increased our soybean exports, for example, over the last year. That could in part be related to this trade spat between China and the U.S.”