Prices decent with harvest 2019 nearing its end
By Tim Kalinowski
While agricultural export markets are still shaky for Canadian farmers, Alberta Agriculture and Forestry provincial crop analyst Neil Blue says overall things have stabilized in the past two months, bringing more certainty to the marketplace than previously seen earlier in the year.
Blue says strong feed grain demand and a lower Canadian dollar have shored things up, and the Futures Market is projecting stronger prices for the moment on certain commodities.
“Over the summer the feed grain prices in particular continue to be very strong,” Blue confirms. “There was tight supplies of feed barley, partly because of the inclement weather we had during the winter and fairly large cattle numbers to feed here in Alberta. The other factor was barley exports were higher this year, notably to China. That create tight supplies here which drove our feed prices fairly high to almost record highs across Alberta and the Prairies.
“The demand for feed also helped with wheat prices. At times, we saw feed wheat prices as high as what we would normally get for high quality wheat.”
On the subject of China, Blue says they have been one of our strongest export markets this year despite the current Huawei executive dispute. This is due, in part, to China’s even greater problems with the Trump administration south of the border, he confirms.
According the the Canadian Grain Commission, China has been the second largest importer of Canadian wheat this year after Indonesia. Blue says China has also continued to import Canadian canola oil while reducing its imports of other canola products.
This fact, and the continuing strength of U.S. market demand for oil and meal, has allowed canola farmers to hope for a decent return on their investment this year.
“Prices have indeed fallen; albeit maybe only 10 or 15 per cent from November or December last fall,” says Blue, noting prices have stabilized since June. “On a per bushel basis, the prices are variable across the province, but averaging around $9.50 to $9.75 a bushel.”
Forward contracting on canola, on the other hand, is currently trending at over $10 per bushel, Blue confirms. The key thing now, says Blue, is hoping for a good harvest and the frost holds off long enough to get that crop off in good order. A fact which is true of all commodities remaining in field, he says, with premium pricing opportunities for higher quality crops.
“We’re in situation now we’re into new crop pricing of mediocre prices generally, and what we really need is an open-harvest fall and good quality out of our harvest to unlock the best of what is potentially there (in terms of prices). We don’t have a lot of room for error.”
Blue says oats, (trading at $4.75 per bushel at the high end), flax (trading between $11.25 and $12 per bushel) and soybeans (trading between $10 and $11 per bushel) have continued to be a good news stories in 2019. And despite trade tariffs imposed on Canada from India, he says, green peas have also been a standout this year.
“We had an interesting situation there where feed pea prices were sometimes higher than yellow pea prices,” Blue remarks. “The green pea prices for edible peas regained a lot of their premium this last year. That price probably inspired some of the stronger acreage for peas we saw this year. The exports were actually quite good despite India’s restrictions on importing our peas.”
And that has been a consistent theme this year, says Blue— countries who are nominally in trade disputes with Canada, such as China, India and Italy, have continued to consistently buy Canadian agricultural products; albeit at a lesser rate than in previous years.
“China continues to be an importer of Canadian canola oil, and that has supported our crushers and our markets and continues to support our prices along the way,” he explains. “India continues to import some too on peas and lentils— not as much as we’d like but there is still a market there. Other countries that have popped up? Bangladesh has become a fairly important importer of our (pea and lentil) products as well, and on the wheat side we have over 60 countries that import our wheat; so it is a very diversified market compared to other crops.
“We also have several markets for our durum,” Blue adds, “but one of those is still Italy despite the restrictions they have for our durum crops. We are still shipping significant quantities to Italy; although not nearly as much as we had been prior to the restrictions being imposed.”
Blue says, in fact, there is some reason for cautious optimism in most of Canada’s main export crops that if the quality is there, so too will be a decent dollar figure return for them.
In fact, wheat may be the only commodity where there doesn’t seem to be any soft landing place at the moment price-wise, says Blue.
“That milling wheat price is sure not very good yet,” he states. “It’s just a good thing we are able to export a lot. Because prices are low it did stimulate demand, and we did move a lot of wheat as a result of that.”
Blue says a continuing glut of wheat in the world, especially in Russia and Ukraine, has kept wheat prices low, and he does not see how the market will be able to get rid of all the carryover out there as things stand today.
“It has been really the doldrums,” he concludes.