Spring Seeding Silver Linings as we look ahead into 2018 crop year

By Tim Kalinowski

As spring seeding approaches, there are a few clouds on western Canadian agriculture’s sunny horizons. Uncertainty over NAFTA, higher interest rates and a low Canadian dollar represent a few of those clouds, but also continuing tariffs on Canadian peas and lentils have to be considered, says Alberta Agriculture and Forestry crop analyst Neil Blue. “Green pea prices are not too bad,” explains Blue. “They have regained about a dollar a bushel to the yellow peas. Yellow peas did drop pretty much immediately after the tariff by India. “However, the prices are still not terrible from an historic point-of-view. They are certainly terrible compared to two years ago, and even a year ago, but nonetheless peas are well-recognized for the agronomic advantages. “There will be a substantial drop,” he adds, “perhaps as much as a 15 per cent, but they may not be a complete write-off. Some analysts are predicting a higher drop than I am.” According to Blue, that should put the price range for yellow peas at about $6.75 per bushel, perhaps as much as $7.00 per bushel by the fall. Green peas will likely be in $7.00 to $7.50 range. “Greens will probably continue to command that dollar per bushel premium,” Blue predicts. For lentils, the picture is not so bright for 2018. Blue says producers should probably be thinking about next year country for those. “In response to the similar tariff from India, and also because of large supplies carried over from the previous two years, I think lentils will be down 20 per cent or maybe 25 per cent even,” concludes Blue. “So no good news there this spring, but in response to lower acres expected, there may be some improvement in price next winter.” While pulses have been struggling in the market, Blue says grains could be the X-factor for greater profitability this year. “There will be relatively strong prices for durum,” he predicts. “I think durum acreage will likely be up about five per cent, and there has been pretty good movement of durum as well. “On the non-durum wheat side I think we will see a shift into the hard red spring to try to capture some of that protein premium that we have experienced this winter.” Blue says the greatest risk to those good price outlooks is the potential for oversupply. “Depending how the crop turns out, we may see that premium fall off a bit this fall; at least depending on what happens in other growing regions of the world,” he states. Blue pegs hard red wheat prices for No. 1, 13.5 at about $6.50 to $7.00 a bushel. He also predicts some offset in CPS wheat as prices remain flat in that $5.50 to $6.00 range. “We have seen better, we have seen worse,” he concludes. According to Blue, canola should continue its profitable run in 2018 if the international trade winds blow fair.

“The China situation isn’t anymore of a threat to our exports this year over last, but it is a continued factor to be aware of, for sure,” states Blue. “In terms of prices, we are a little bit down on the crushed so far, but still strong on exports. “As far as being a ready cash crop, and being able to get the money out of it, I think canola will probably be flat or possibly up a little; maybe two or three per cent. It will be a strong acreage again this year.” Mustard will also remain flat, he figures. “Prices are down a bit on a rebound in production, but I think it will still be a crop popular in the south of the province.” Grain corn, soybean and barley should also see increased acreage in southern Alberta, says Blue. “Some of the up and coming crops— corn will continue to increase, I think, in popularity; especially in the south, at least on the grain corn side. And probably soybeans to some extent too. They didn’t turn out too well last year, but I think they are recognized for their nitrogen fixing aspect, and also price, as competitive in some areas; at least as an alternative to canola. “I think in response to good feed barley prices and very good movement of malt barley too, there will be an increase and rebound in barley acreage. Maybe up 10 per cent.” Malting barley maybe one of the markets with the greatest potential for profit in Alberta, says Blue, if a farmer can get a contract with the craft brewers and malters. “Another thing that is developing is the various varieties of malting barley,” he explains. “Some of those are making their way into the craft brewery market, and some producers have been able to develop relations with craft brewers and craft brewery maltsters. So there is some of that which is going on, and I think it will continue. “That’s a good, if limited, market which is carrying on. The craft brewery industry uses three times as much malt as the traditional brewers would use in their brewing.” If a producer wanted to take a risk on something this year, to try something out on limited acres, Blue suggests flax might be one of the dark horses for 2018. “Some might take a look at flax for a bit of a flyer, just to try out,” he states. “It has not got a spectacular price, but there has been reasonable movement. “Flax isn’t one you can just sell anytime you want to, but I think flax acres will be fairly flat,” he adds. “Some people might be considering that one as an alternative to canola, but it also has some of the similar diseases. So, again, they will have to keep that in mind if they are interchanging with canola in their rotation.” Overall, Blue is guardedly optimistic about the crop year ahead. “I am optimistic, but not abundantly so,” he confirms. “A major factor in our prices is the value of the Canadian dollar, particularly relative to the U.S. It has come off a little, but I think it will continue to struggle below the $0.80 level; somewhere between $0.75 and $0.80 on the Canadian dollar. And that is probably going to be a result of what looks to be an interest differential widening between the U.S. and Canada. “One positive, the U.S. administration is getting lots of support for a continuation of the NAFTA agreement from within the U.S.” Blue says, as always, farmers have to keep a close eye on shifts in the market, and be prepared to strike fast when an opportunity arises. “It’s matter of being aware of opportunities when they arise, and knowing how to take advantage of those when they do arise,” states Blue. “We had, for example, an opportunity in late June last year, and early July, in the wheat market which was fairly short-lived. And some producers took advantage of that, and there was some prices locked in at over $9.00 per bushel for No. 1 13.5 wheat. “There may be other ways to lock in with a contract through a grain company, but that was an opportunity in hindsight, as usual, which was a good one.”