July Market Commentaries

Grain Millers

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Did the US trade embargoes have any effect on the prairie organic markets?

We have not experienced any price changes due to the US trade embargoes, and likely will not in the short term. Longer term, however, could be a different story if they do put significant tariffs on finished grain products going into the US as a large amount of our milled oat products head south of the border.

Were prairie organic markets affected when Japan and Korea stopped importing wheat after GMO plants were found?

We didn’t see anything really change in our wheat pricing, but we are only a small player in that market, and our products stay pretty much in North America. We had anticipated a possible surge in demand for organic wheats from those Asian countries after this discovery, but to date, we have not seen it.

W.A. Grain and Pulse Solutions

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Did the US trade embargoes have any effect on the prairie organic grain markets?

We have not felt the effects of the US trade embargo. A lot of the products that we process and trade were not on the list of commodities facing tariffs. However, we are watching closely on whether the list expands into the segments that we mainly focus on.

Were prairie organic markets affected when Japan and Korea stopped importing wheat after GMO plants were found?

Although we are not active in the organic wheat market, we like to keep our ears to the ground by actively talking to producers in Western Canada. We did not come across any producers or hear of any that were affected the wheat ban from Korea and Japan. Luckily the ban was relatively short and Canada will resume wheat shipments to those countries.

Mercaris

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Did the US trade embargoes have any effect on the prairie organic markets?

So far, from the US perspective the answer appears to be no. The organic wheat prices are either holding steady, or showing some decline which has been mostly in-line with supply pressure from the winter wheat harvest. US durum wheat imports from Canada have remained below their 2017 levels since March. However, imports of organic corn and barley have remained quite strong. One could make the argument that the building trade tension between the US and China could lead to a decrease in US organic soybean imports from Argentina as China increases it take of Argentina’s soybean supply. Such a situation would create an opportunity for Canadian organic meal and oilseed producers to satisfy the resulting gap in demand. However, organic beans fetch a significant price premium over conventional, which should limit China’s interest in them. The bigger Argentina related risk is weather, and the impact that their drought is having on their 2018 crop. As of now, the US is still very reliant on organic grain imports, which keeps US organic agriculture trade running in the opposite direction of the mounting trade obstacles.

Field Farms Marketing

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Were prairie organic markets affected when Japan and Korea stopped importing wheat after GMO plants were found?

The Japanese and South Korean markets were prompt to stop all imports of Canadian wheat earlier this year after finding traces of genetically modified traits in some of the wheat that was delivered. If these GMO traits in Canadian wheat are proven to be widespread, this could be a major challenge for producers with cross-pollination making it very difficult to eliminate the strain. It would be particularly catastrophic for the organic producers – who are well aware of the zero tolerance towards GMO’s – to be able to market their yields; creating additional hurdles such as new testing, new contractual guidelines on quality, and new rules to permit Canadian wheat imports. For the time being we are happy to report that the wheat imported into Japan appears to have been an isolated incident, with Japan and South Korea lifting its temporary suspension of Canadian wheat.

June Market Commentaries

Grain Millers

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Now that seeding is complete, what should farmers be thinking about in terms of marketing? Is there anything they should be strategically planning for?

Now that seeding is complete, the primary thought usually runs to getting the bins empty and ready to refill at harvest. It can be a very tough time to find lucrative markets, because most buyers are full for the summer, or very close to it. Also, most buyers are looking to have their bins as empty as possible at this time of year to accommodate the harvest delivery contracts that they have signed earlier. Our recommendation is to strive to have most of the grain that you are needing to sell marketed prior to seeding, to avoid the usually depressed post-seeding market. 

What are some things that producers should be thinking of/doing to prepare for harvest?

To prepare for harvest, one of the most important things that farmers can do is properly prepare their storage. This means cleaning out bins, sweeping, checking for any leaks or water seepage, and if necessary, spreading some Diatomaceous Earth around the perimeter of the bin. This will help prevent rusty grain beetles and other stored grain insects from finding a home in your grain.

What are some post-harvest things that can affect the quality of crops, and how would you suggest farmers deal with those issues?

During harvest, and post harvest, producers need to be taking good samples, and checking quality and moisture as frequently as needed. One of the easiest things to overlook is stored grain moisture, and how quickly that can turn into a quality issue, potentially taking your grain out of the milling market, and putting into the much less lucrative feed market. Keeping accurate samples and getting grain dried down into good storable condition is imperative. Having good storage is key to ensuring the quality of your grain remains saleable and opens doors to many marketing opportunities.

Field Farms Marketing

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Now that seeding is complete, what should farmers be thinking about in terms of marketing? Is there anything they should be strategically planning for?

Now that seeding is complete, farmers should be thinking about their marketing strategy: food vs the feed market. By devising a strategy that can assess market conditions, prices, and costs-to-carry; producers will be better positioned to unload their products for an optimal return. We believe that producers ‘should’ take this time to reflect on previous crop seasons – what was sold into the food market and what percentage of the overall crop was sold into the feed market. Rotating with feed crops, such as peas and oats is a good strategy to replenish the soils. Finally, it is important to sell crops in segments: some at harvest, mid-season, and before the new crop year. This strategy helps dilute market risk and regulate cash flow.

What are some things that producers should be thinking of/doing to prepare for harvest?

While in preparation for harvest, farmers should be communicating with their local bulk carriers to identify cost-saving modes of transportation to bring product to market efficiently. Also, knowing the closest rail-site for loading can help better market the farmers’ product and may help the farmer add value by transferring these savings to the total sale price.

What are some post-harvest things that can affect the quality of crops, and how would you suggest farmers deal with those issues?

Moisture migration and insect infestation are two leading factors that impact the quality of the crops and can be minimized through several stored-grain management techniques. Aerating the crops is the most effective way to maintain optimal temperature and moisture levels and prevent spoilage from mold pockets. In efforts to control insect infestation, farmers should add diatomaceous earth to the stored-grain while it is being rotated to desiccate any insects while they feed.

W.A. Grain and Pulse Solutions

Now that seeding is complete, what should farmers be thinking about in terms of marketing? Is there anything they should be strategically planning for?

We believe the best marketing tactic for any producer is to produce a great crop. If the crop easily makes specification, there will be no shortage of buyers wanting their product.  Producers should be consistently monitoring progress and managing their weeds as necessary.  Always keep an ear to the market and where it’s heading but most of the marketing decisions should be made before seeding.  Always talk to your buyers before beginning to get a feel on where demand is.

What are some things that producers should be thinking of/doing to prepare for harvest?

We feel that most producers, before preparing for harvest, must be aware of the serious nature of earth tagging. For the most part, these issues can be avoided if they are aware of the situation beforehand. We suggest producers ensure best farming practices to minimize this problem.

Kamut

Now that seeding is complete, what should farmers be thinking about in terms of marketing? Is there anything they should be strategically planning for?

Our take away from what we have heard this spring is that while there are export opportunities. The export market faces so many unknown variables thanks to the US pulling out of international trade agreements and threatening and initiating tariffs, that it is difficult to predict the export and domestic markets. Storage variables may come into play, both having enough on farm storage and suffering loss due to an extended storage period for organic grains.

May Market Commentaries

Grain Millers

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What trends are you currently seeing in the organic grain market?

One of the trends we are seeing in the organic market these days would be the shift back in acres from more specialty crops like peas, lentils, and mustards, to more traditional crops such as oats, wheat, and barley. Producers have realized that the consistency just isn’t there with production of the specialty crops, so they have reduced acreage of those and gone back to easier crops to grow and market.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

We have seen a significant increase in wheat and barley production, and that has driven prices lower through this spring, and looking ahead into next year. We have also realized an increase in oat production, but demand has been doing a nice job of keeping up with the increase in supply, leaving prices stable going into next year.

What changes or events in the global marketplace are affecting Canadian prairie markets? Which crops are affected and why?

We have been experiencing a large amount of organic feed products being imported into the US, and that seems to have put some serious pressure on our domestic feed markets, both down south, and here in Canada. This has mostly hurt barley pricing, but other feed grains such as wheat and oats have had a hard time staying at decent levels back to the producer.

Organic Trade Solutions

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What trends are you currently seeing in the organic grain market?

Organics grain follows a lot of trends in the natural products industry. For example, Dairy alternatives like oat, hemp, pea, coconut and almond drinks are hot as consumers move away from unhealthy sugary drinks like pop. It also reflects the decreasing market share for fluid milk. Grab and Go convenience foods that are healthy are also selling very well as families are becoming smaller and the percentage of single people as part of the population is at all time highs. Plant based proteins like pea and hemp are also popular, especially pea protein given it’s lower price point than hemp.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

There appears to be a lot of acreage that is transitioning to organic. This may put significant short-term pressure on the supply side as Canadian and US farmers must also contend with organic imports and an apparent high level of fraud from the imported grain. The positive side is that the market is growing, yet there is still significant over production of oats and perhaps even hard spring wheat.

What changes or events in the global marketplace are affecting Canadian prairie markets? Which crops are affected and why?

The feed barley market into the US has all but collapsed for Canadian farmers as corn imported from the former Soviet Bloc is flooding US feed markets. Eastern Europe is now producing organic hemp which could affect hemp markets.

W.A. Grain and Pulse Solutions

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What trends are you currently seeing in the organic grain market?

With the rising trend of organics, we’ve been seeing producers utilize better technology and farming practices for soil management.  There have also been producers in the prairies begin to experiment with regenerative farming practices.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

There has been strong interest in organic peas from the Western Canada region.  We’ve seen acres grow substantially in comparison to the last few years.  Producers who would have never considered a pulse crop are now adding it into their rotation.  The strong demand for Canadian yellow and green peas in Asia have led to a rise in production, along with increased prices.

What changes or events in the global marketplace are affecting Canadian prairie markets? Which crops are affected and why?

Last year there were strong demand for organic French green lentils.  This caused a huge shortfall due to the lack of supply and poor crop year in other producing countries.

Kamut

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What trends are you currently seeing in the organic grain market?

We see a lot of large questions about the organic grain market. We are a small producer who has historically had a confident market presence in Europe. We are seeing an interruption caused by some non-tariff trade barriers. We are focusing our efforts on the North American specialty/artisan users market to cope.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

We are cutting back on acres. We are in the position of having too much grain at the moment, and cutting prices.

What changes or events in the global marketplace are affecting Canadian prairie markets? Which crops are affected and why?

There seems to be large questions driven by the chaotic nature of the US export market. I have talked to customers who market pulses and grains who have been affected by non-tariff trade barriers along with the erratic and unpredictable forces of the current export market.

Hemp Production Services

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The organic hemp grain market in 2018 underwent a price correction as other countries entered the marketplace in response to high market prices. Beginning in 2017, lower priced organic hemp grain coming in from China and Europe disrupted the US market, forcing prices down. The new reality is that organic hemp grain is now a competitive global commodity.

In response to this market shift, 2018 Canadian contract prices were reduced so that high quality Canadian organic hemp grain could be competitive in the global market. This decline was important as more regions of the world are increasing organic hemp grain production. With improved genetics and robust agronomy support, returns to Canadian organic growers can still be strong even at lower pricing.

Global demand for organic hemp grain has increased significantly, and this trend is expected to continue in the future. This is good news for Canadian growers who collectively have many years of experience to draw from and access to an established processing infrastructure.

Another possible income stream from hemp production in 2018 is the extraction of CBD from the chaff. Hemp Production Services is investing in technologies and partnerships to streamline this parallel market into the current production system.

Hemp Production Services is interested in increasing the number of Canadian organic hemp producers to meet market demand. If carefully planned, this crop can be a valuable addition in an organic crop rotation. Field days will be organized this summer to learn more about the organic hemp market and management strategies on organic farms.

Mercaris

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What trends are you currently seeing in the organic grain market?

For US markets, right now there are two factors worth keeping an eye on. The first is foreign trade. As has been highly publicized, the US organic sector is seeing the flow of organic imports slow over the 2017/18 marketing year. This has been coupled with price support for organic feed grade corn spot trades, and subsequently feed-grade organic wheat, with prices in both markets averaging more than $1/bu above year ago prices during the first quarter of 2018. Over April 2018, the delivered organic feed-grade corn price averaged $10.48/bu, up $1.34/bu from April 2017. Additionally, the premium over last year appears to be stable for the time being, with quotes of fourth quarter organic grain delivery mostly even with current spot price quotes.

The second is the impact of weather on spring planting. US organic spring wheat planting is particularly far behind this year. Planting progress across the top-ten US organic spring wheat producing states averaged 54% complete the week of May 14 2018, 23% behind the pace of planting in 2017. Organic corn and soybean planting was also behind schedule the week of May 14, primarily held back by delayed planting in the two largest organic corn and soybean states, Iowa and Minnesota.

Are there any specific crops you’re seeing more production of? How is that affecting markets?

In the US we fully expect to see more organic corn and soybean acres harvest this fall as domestic organic livestock producers have cut their reliance on imports in exchange for more focus on domestic supplies. Wheat holds the potential to throw a curveball, as Mercaris estimates organic wheat yields fell 17% y/y in 2017 due to drought conditions in the northern plains. Recent history has witnessed organic wheat acres expand right along with corn and soybean acres. If US organic wheat acres expand by the same magnitude that they have over the past two years, and wheat yields recover to historically average levels, then the market may find a lot more wheat available for spot transactions following harvest.