May Market Commentaries

Sustainable Grain

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What is causing the slow movement of organic grain this past winter?

Whether or not organic grain movement is ‘slow’ these days depends on who you ask. Some organic farms and grain companies aren’t experiencing any change in demand, or delays in shipping. My observation is that in these cases, the destination market is Canada or the U.S.

Where demand appears to be falling for Canadian organic grain is to companies that trade internationally, and for grain from organic farms that rely on selling to these types of companies. Canada does not have a strong brand reputation in overseas markets for organic food ingredients. Buyers report a preference to buy from other origins besides Canada where possible, for two reasons. Canadian organic grains have higher instance of failing to meet the pesticide maximum residue limits (MRL’s). Secondly, they’re uncompetitively high-priced. Between the farms’ cost of production and distance to market, organic crops in many cases are significantly cheaper coming out of countries in South America, the Indian Subcontinent, eastern Europe, and potentially others. Case in point, imports of organic grains into Canada exceed exports in some cases. This is happening as a result of global price arbitrage.

With the use and impact of glyphosate gaining attention internationally, what impact will this have on Canada’s agricultural sector?

Looking ahead, the big question in my mind is how long will North American food channels remain satisfied customers of organic food crops grown in western Canada? Just today an article was published by The Detox Project about organic protein powders that carry glyphosate. Western Canada is the world’s dominant producer and exporter of peas and lentils and some conventional farms have been using glyphosate as a pre-harvest dessicant even though that application is not approved by Health Canada, which is probably causing some drift into organic fields. Other theories are, that there has been so much glyphosate applied in the western Canadian agriculture environment over the past decades that it’s contaminating soils and rainwater, leading to the transfer of trace amounts into organic food crops. Whatever the cause of glyphosate residues showing up in retail foods, it’s not going to be quick or easy to eliminate from the farming environment across the Canadian Prairies.

Canada’s agriculture sector is facing major challenges with market access right now in almost all mainstream crops that farmers rely on for income, both conventional and organic. The problems will most likely continue to mount, as lab testing technology improves, and media coverage around climate change and glyphosate intensifies. In my opinion there are very real safety and phytosanitary considerations behind recent incidences of blocked markets and shifting trade flows, that aren’t getting the attention needed by the Canadian agriculture industry. The impact of losing market demand is directly felt by primary producers in the form of lower prices.

One Degree Organics

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Currently, what is causing the slow movement of grains?

There are various market forces impacting the movement of grains, but the reduction of international interest in Canadian grain products is a key variable. Countries around the world are using non-tariff trade barriers to restrict the entry of grains due to the presence of GMO varieties and contamination of residual herbicides such as glyphosate.

What options are available to the organic sector in order to speed up the movement of grains? 

The sector can continue to work with groups like the Canadian Organic Trade Association and the Prairie Organic Grain network to influence government policy around allowable uses as glyphosate and maximum allowable residue.

To what extent can organic producers influence the movement of grains?

There are many steps that organic producers can take to influence movement. Talking to other farmers about the challenges of glyphosate, in particular the pre-harvest use as a desiccant, and the impact on international markets. Further, advocating for organic transition will help lift the segment and expand the opportunities for the entire industry.

With the use and impact of glyphosate gaining attention internationally,

A. What impact will this have on Canada’s agricultural sector?

We expect an overall negative impact for the conventional sector as countries in Europe and Asia will use the presence of glyphosate on conventionally grown grains and legumes as a non-tariff trade barrier. Canada is one of the few countries globally to have high levels of allowable residue on grains. Further, as more conventional farmers use glyphosate for the unlabelled/unapproved benefit of desiccation, this challenge will likely worsen over the coming year.

B. What impact will this have on Canadian organic farmers?

This will create both risk and opportunity for Canadian Organic farmers. On the risk side, the continued and expanded use by conventional farmers will require Organic farmers to remain vigilant to protect their crops from inadvertent contamination. It is frustrating that the onus is on organic farmers, but it is a current reality. However, as the cleanest source of food in our current agricultural system, organic farmers have an opportunity to capitalize on the growing consumer interest in clean, organic food. In particular, an emerging trend is to certify grains as glyphosate-free which consumers are seeking to ensure that even their organic foods are free of contamination.

Hemp Production Services

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Currently, what is causing the slow movement of grain?

In the organic hemp market, slow movement is not an issue thanks to increased demand both in the US and Canada. This means that most organic growers have already been able to deliver their contracted production if their production quality met spec. Markets have strengthened and this year’s contract prices reflect that by providing growers a higher profit.

What options are available to the organic sector in order to speed up the movement of grains?

Speeding up movement is not a concern with the organic hemp market at this time. As a fresh raw product, hemp needs to be processed and marketed throughout the year which sometimes creates challenges depending at what point in the delivery cycle the production is requested.

To what extent can organic growers influence the movement of grains?

For organic hemp, quality is the number one factor influencing movement. Experienced growers recognize the importance of good fertility management, weed control, timely harvest and post-harvest management to end up with a high quality product. Quality begins already in the year prior to production by setting up the field for the best possible hemp crop.

Grain Millers

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Currently, what is causing the slow movement of grain?

I don’t think that there is less grain moving, or slower movement of grain, right now that any other year. We have experienced an increase in production in the organic sector year after year. This is due to not only an increase in acreage, but an increased yield on nearly every organic acre in production today. For companies such as Grain Millers, we are actually moving more grain this year than previous years, so we are not experiencing a slowdown.

What options are available to the organic sector in order to speed up the movement of grains? 

Really the only option available to producers to speed up movement of grain off their farm is forward contracting with companies that have a steady use schedule, such as a miller or processor. If a producer sells to a middleman or broker, then that buyer is the one that needs to move their grain, and they are at the mercy of whoever they have it sold to. The shorter you can make the chain between yourself and the end user, the quicker, and more consistently, your grain will move.

To what extent can organic producers influence the movement of grains?

I don’t know that there is really much that producers can do to influence the movement of grains. There are a number of companies in the industry that have very good reputations when it comes to moving grain on time, so sticking with selling to buyers like that is key to good movement.

April Market Commentaries

Field Farms Marketing Ltd.

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What considerations should producers be weighing when choosing what to seed?

Producers should not be focused entirely on the market that currently has higher prices over other markets. Prices can change. Rather, producers should focus on seeding their acres into crops that will generate steady reliable cashflow for their operation. There is always room to try something new, but don’t jump into a market with both feet because of high prices. Another option is to speak with buyers to get an idea of what they are looking to purchase that year. At the end of the day, producers know what crops grow best with their soil from experience.

How can producers set themselves up for high quality grains this season?

It is important for producers to get their soil tested on a regular basis (yearly) to ensure the soil isn’t lacking any essential nutrients for the particular crops that are being grown that season. On the organic side of farming there are still options when it comes to adding nutrients to soil, even though we cannot add conventional fertilizers to the soil. Your local organic soil expert would be the best source to reach out to for this matter. The other important ingredient for growing high quality grain is planting in the right weather, which can sometimes be difficult to coordinate due to the weather not cooperating. Overall, the most important thing producers can do is make sure their soils have the correct composition of nutrients and organic matter that are appropriate for the crop they are growing. The health of the soil will play a large role in determining the health of the crop.

For producers, what are the market considerations for intercropping?

If you are new to intercropping, ensure you perform your due diligence beforehand to see what works and what doesn’t. As a producer you will need to know what you are going to do with your intercropped harvest. If you plan to sell it, you may need to have it separated which will come with additional costs or it can be used as mixed livestock feed. Alternatively, intercropping can be an efficient way to fertilize the soil. After harvesting one of the crops, the remaining crop can be worked under as green manure. Intercropping has the potential to increase soil fertility and crop yield with certain crop combinations, but the producer must consider multiple things in the planning stages such as time to maturity and what combinations tend to work best together.

Grain Millers

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What considerations should producers be weighing when choosing what to seed?

Producers need to keep a few things in mind when choosing what to seed, such as price and movement, but more importantly, producers need to be working on getting a rotation set on the farm that will allow them to more consistently grow good quality, clean crops on their farm. This is not normally something that happens overnight, but is imperative in an organic operation.

How can producers set themselves up for high quality grain this season? 

This answers tails on from the first one, as growing high quality grains stems from a good rotation, as well as good nutrient and weed management. Rotation is key to this, but there are also some new soil amendments available that can increase quality and productivity now as well.

For producers, what are the market considerations for intercropping?

The most important thing to consider when looking at intercropping is who will be buying the separated commodities from you, and knowing their specs very well. For example, in the case of an oat/pea intercrop, we have a zero tolerance for legumes in our milling oats. So, for that intercrop, you need to be sure that you are going to be able to clean all of the peas out of the oats, to avoid additional costs or potential rejection when you deliver your grain.

Organic Trade Solutions and Farmer Direct Organic Foods

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What considerations should producers be weighing when choosing what to seed?

Farmers should first maintain their crop rotations. Beyond that, cultivate crops that will maintain the existing relationships growers have with buyers. In a year like this year, growers need to consider that there may be over production of certain crops so going heavy on green manure crops, to increase fertility for future years, could be a good move.

How can producers set themselves up for high quality grains this season?

Organic agriculture is a technology and like most technologies there are tools such as Mycorrhizal Fungi and Clonostachys Rosea that if used properly will boost soil fertility and disease resistance. Talk to fellow farmers that are using these products and get their feedback. Based on the current scientific consensus and from speaking to and visiting organic farms that continuous crop, nature doesn’t like bare ground; as the beneficial micro-organisms that are the foundation of soil fertility die off if they do not have plant roots to synergize with. Investigate continuous cropping systems used by other organic farmers and see if any of these or variations of are appropriate for your farm.

For producers, what are the market considerations for intercropping?

One important market consideration for intercropping is how or which cleaning plant will separate out your intercrop. Go with an intercrop that would be easily separated. For example, oats and peas are easily separated as they both have very different test weights, so will separate on a gravity table, and shapes, so they will separate with an indent cleaner.

March Market Commentaries

Field Farms Marketing Ltd.

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What organic grain trends are you seeing in Manitoba? in Saskatchewan? and in Alberta?

As we move into the spring, we have seen a correction in the prices of a number of grains and cereals that are grown in the prairie provinces. Price corrections, like the one we are currently witnessing, are a part of the natural market cycle, especially considering that we have seen some very high prices in the past couple of years. Even with prices in corrective territory, the organic market continues to enjoy generous premiums relative to conventional market prices. Currently, there is an abundant supply of organic wheat available in storage at farms across the prairies. The plentiful supply has been a contributing factor in the corrective prices that we are seeing at the moment. Many of the mills have been full with supply in the first couple months of the year. That said, typically around March/April mills will begin to search for and contract supply for Q2/Q3, which should use up a good portion of the supply that is on the market currently.

Overall, what is the current state of the organic grain market? What options do prairie organic grain farmers have if this continues?

The organic grain market is ticking along at a steady pace even with the higher volume of supply on the market from both domestic and international sources. We are seeing prices sitting closer to their longer term averages, which is slightly down from the highs witnessed in previous years. Each year there are additional farmers converting their practices from conventional to organic, but there is still much less domestic supply available than what the market can absorb. Much of the organic market is supplied by international sources, so there is room for domestic supply to expand in order to meet the current domestic demand- the organic marketplace is still growing year over year. A good practice for organic farmers to get into is speaking to a few potential buyers before seeding in order to get a better idea of what is in demand that year. Another good option is entering a portion of your seeded acres into forward contracts in order to reduce the uncertainty for at least a portion of cash flow.

Grain Millers

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What organic grain trends are you seeing in Manitoba? in Saskatchewan? and in Alberta?

The main trend we are seeing across all 3 provinces is a switch back to more traditional organic crops this year. With more uncertainty, and a lack of forward contracting options, producers are leaning away from the pulses, and specialty crops such as peas, lentils and mustards, and back into oats, wheat and flax.

How are provincial, national, and/or international markets impacting organics grains in the prairies?

Part of the reason for the switch back to cereal crops is that overall, markets are tight. With new producers chasing the often-higher priced specialty markets, market demand for traditional crops has been driven higher. For example, if the world demand for organic lentils climbs, the prairies will see acreage climb, in turn pressuring acres of other crops and helping to support those prices. Imports of organic feeds into the US has been an important factor as well. These import grains are often able to be brought in at a lower price than domestic grain, pushing domestic feed markets lower and making it harder for our growers to market off-grade products.

Overall, what is the current state of the organic grain market? What options do prairie organic grain farmers have if this continues?

We still feel that the organic market is experiencing growth right now. Market prices have leveled off some, but there is still growing demand in the market. I think the key for organic producers is to “stay the course” as far as rotations go, and to avoid chasing the short term, high priced specialty markets, with much more than a few acres. Once they get a rotation set up that is working well for them, that is the best course for long term success in this market.

February Market Commentaries

Grain Millers

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When looking to contract grain, what are the most important questions that a producer needs to ask a potential buyer?

When contracting your grain, always be sure to know the specs for the grain that you are contracting. Often times, important details like moisture maximums, and protein levels, will differ from buyer to buyer, so don’t assume that these will be standard. Also, see how firm the delivery time frames are with your buyer, especially if you are selling grain for a specific delivery window to meet a payment or other obligation. Along with that, make sure that you know the buyer’s payment terms, these can vary greatly from buyer to buyer as well.

What are the potential pros and cons to signing a forward contract for a producer? Are there good reasons to not sign contracts ahead of seeding/harvest?

Forward contracting is an essential tool that a producer can use to ensure that they have price guarantee, and more importantly, delivery opportunities when they need them in the coming year. Having your price locked in on a percentage, or your entire crop, can make budgeting decisions easier, and protect you from any price drop. However, on the flip side, you may miss out on unexpected rallies in the market, which is really the only con to signing forward contracts.

What should producers be looking for to ensure that they have an airtight contract with their buyer?

When you are contracting your grain, ask LOTS of questions. If for any reason, the answers you get are not completely to your satisfaction, ask again. There should be no reason that your buyer doesn’t have a definite answer when it comes to your contract. Also, once you receive the contract, go over it in detail, and if you have any questions, call your buyer and ask them immediately. In most cases, if you delay in signing for whatever reason, the contract becomes valid, and you are obligated to fill it. Many producers believe that if they do not sign a contract, then they are not obligated to fulfill it, and that is simply not the case in most contractual situations.

Sustainable Grain

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When looking to contract grain, what are the most important questions that a producer needs to ask a potential buyer?

  • Every contract should state the grain, grade, price, location and delivery window.
  • Beneficial on the contract: signatures, date of agreement, dispute and resolution mechanisms, affidavits for wash tickets on trucks, etc.

What are the potential pros and cons to signing a forward contract for a producer? Are there good reasons to not sign contracts ahead of seeding/harvest?

A forward contract should, but does not always, guarantee delivery and payment within a pre-set window. Contracting production ahead of the growing season locks in a higher crop insurance price, in the event of loss. Crop insurance prices on organics are lower than the market. Insurance and buyer performance aside, the main factor influencing the decision to contract production ahead of harvest is the seller’s opinion on price direction. Cash flow needs and storage capacity at harvest are secondary but critical factors to forward plan around.

What should producers be looking for to ensure that they have an airtight contract with their buyer?

The only thing that will ensure buyers demonstrate airtight performance on contracts is a bull market. There are no trade rules in organics, no talk of developing them, and therefore no recourse for non-compliance to contract terms.

Field Farms Marketing

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When looking to contract grain, what are the most important questions that a producer needs to ask a potential buyer?

When contracting grain, the producer and potential buyer need to ensure there is clear communication between them in order to avoid any confusion at a later date. This begins with asking the right questions. As a producer, probably one of the foremost questions on your mind are the details surrounding the terms of payment. How will the buyer pay you and by when? It is also important to ask the buyer what they are looking for surrounding the product specs and about the details regarding delivery of the product. Is the buyer going to pick up the product from the farm or are you responsible for delivering it to a specified location? It is crucial to know the small details of the agreement to ensure both parties walk away happy, leaving the door open for future business.

What are the potential pros and cons to signing a forward contract for a producer? Are there good reasons to not sign contracts ahead of seeding/harvest?

By entering into a forward contact with a buyer you are able to lock in an agreeable price for your crop at a future date, thereby removing any uncertainty surrounding how much you will receive for your crop. That being said, there are still benefits and drawbacks of forward contracts. If market prices decline as the delivery date approaches your contract price is locked in, meaning the price you receive is higher than the current market prices. On the contrary, if market prices are rising leading up to the delivery date of your contract, the contract price is locked in at lower prices meaning you are selling product at lower prices than what the market is currently offering. A technique to mitigate this risk is to forward contract only a portion of the crop that you are expecting to produce. It may not be the best option to enter a forward contract before seeding/harvesting if there is any doubt surrounding the quality or quantity of the crop as you would be obligated to deliver the specified quality and quantity of product that was stated in the contract.

What should producers be looking for to ensure that they have an airtight contract with their buyer?

For a producer to ensure that their contract with a buyer is as airtight as possible they should ask for all terms and details of the contract to be in writing, in order to leave no room for interpretation. Important details to include in any contract are the product description, quality and grading requirements, price, payment terms, delivery schedule, and any risk that each party assumes by entering into the contract. Another commonly overlooked point is to ensure you read, understand and agree with every term in the entire contract before you put your signature on it. If there are any terms in the contract that are convoluted, be sure to ask the buyer for clarification. When it comes to contracts, the devil is in the details.

January Market Commentaries

Grain Millers

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What marketing advice would you give to farmers for 2019?

My marketing advice does not really change much year to year. In my mind, the best advice I can give is to start marketing your crop when the price reaches a profitable level, then scale up your selling from there. The key to this strategy is to be absolutely clear on your cost of production numbers, that way you know where those levels are. I encourage growers to use custom costs for operations such as seeding and harvesting, as those should more accurately reflect the actual costs that are incurred during these times. Those will allow for some costs for the producer’s time, which too many of us fail to factor into the actual costs of these operations.

What crop planning advice would you give to farmers for 2019?

Crop planning is a tough one. It is easy for me, as an oat buyer, to tell growers to just grow oats every year… but that would be unfair! Realistically, growers need to pencil in crops that are easily marketable at a profitable level. For Grain Millers, it is nice that one of the best crops for that on an organic farm is definitely oats! Oats are easy to grow and always one of the easiest crops to market and move. Too often we see producers chasing the big money crops, often resulting in tougher movement as these are generally more specialty crops. My advice is to make sure that you have grain booked for sale and movement when you need cash flow.

What questions should farmers be asking buyers at conferences and networking opportunities?

When farmers get the opportunity to ask questions of buyers, they should try to make sure that if they sell to them, that the buyer will be able to move the grain when they say they will. Pricing on contracts is generally pretty air tight, but there are also discount schedules that can be quite difficult to understand, so that is something else that you may want to quiz your buyer about. We encourage farmers to ask lots of questions, and to make sure that they are clear about everything before we put a deal together. We believe that being open and honest with each other is the cornerstone of building our business relationship with customers.

December Market Commentaries

Grain Millers

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What impact has frost had on organic grain quality and farmer income this harvest?

So far, from what we have seen, the frost had minimal impact on a large amount of the organic crop. Some of the later seeded crops that still contained a large percentage of green, immature kernels have been affected, but for the most part, the crop was mature beyond that in most areas when the frost hit. For us, we have a small tolerance for mild frost damage, so producer income will not be too adversely affected.

How can organic farmers mitigate their risk to frost damage?

The only way to really mitigate frost damage is early seeding, enabling you to harvest a mature crop before the first frost. Along with the early seeding is using good quality seed that will germinate evenly and vigorously. However, if you seed too early, then you are exposing yourself to a late spring frost, which can severely damage your crop as well, possibly even forcing you to reseed it.

What are some strategies for creating a successful producer marketing group?

In my experiences with producer marketing groups, diligence and diversity has made them successful. You need to be in constant contact with your producers, and you need to stay on top and in touch with your markets and buyers in order to capture any premium opportunities. Having good leadership within the group is also key, as buyers will respond well to that.

Sustainable Grain

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What are some strategies for creating a successful producer marketing group?

Our team boasts a long history of helping farmers in conventional operations to market their crops at the best possible prices. Over time, we grew disenchanted with how some farmers default to the advice of salespeople to the detriment of soil health and remain relentlessly committed to maximizing yields, rather than revenues.

This brings up the most important starting point for a successful marketing group: find like-minded farmers with common goals and shared values. There is simply no convincing people to change if they aren’t ready, and the anger and frustration it causes is highly unproductive to the work of marketing grain.

Promoting organic can get you a bloody nose in some conventional circles; and there are hot-button issues in the organic community too. Long-time organic farmers might deny climate change, or habitually default to excessive tillage for weed control, which can be outright offensive to champions of regenerative agriculture.

If successful, a producer marketing group may be able to develop a market based on their collective story. Today’s food companies, faced with a shortage of certified organic food ingredients, are entertaining many alternatives for premium label claims.

This a great time to be gathering together with farms of similar philosophies, sharing values, building culture and crafting that story. Modern food consumers highly value information about where their food comes from, especially when it’s local, safe and nutritious.

November Market Commentaries

Farmer Direct Organic Foods

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How are the feed shortages from a late harvest impacting organic grain farmers?

There is lots of feed corn in the US from domestic production and offshore imports and there is significant carry over barely in the bins in western Canada. So we aren’t seeing any feed shortages. For western Canadian livestock producers looking for locally sourced organic grain, a late harvest could be an issue.

How is the trade war between China and the US impacting Canadian organic grains?

Is the increase in demand we’re experiencing in specialty grains, like hemp, beans and peas due to tariffs on Chinese competition? Or is the increase in demand due to actual increase in consumer demand for organic foods or both. The markets we sell to explicitly don’t purchase Chinese organic grains due to fraud and quality concerns. The market is still moving through old crop hemp and flax so I don’t think we’ll have an indication if the trade war is affecting demand of Canadian origin organic grains for a few months.

What role does the Canadian dollar have in organic grain exports and prices?

The Canadian dollar plays a significant role in the stability or volatility of organic grain exports and prices. The buyers must manage this risk but essentially the farm-gate prices paid to Canadian farmers will follow US farmer prices. So for example this year OTS contracted new crop organic large green lentils at $0.90 Canadian/lb which mirrors the price to US farmers of $0.67 to $0.69 US/lb. To manage or eliminate exchange rate risk we contract with some of our Canadian grower in USD. This year it worked out for the farmers who contracted in USD as they contracted at a high point in Canadian dollar strength when $0.72US/lb equaled $0.90Canadian/lb. That same $0.72US/lb contract is now worth $0.93/lb Canadian.  Since the largest market for western Canadian organic grains is the USA and US based food manufacturers also source the same grains from US farmers, the prices buyers pay tend to be equivalent when the exchange rate is factored in.

Grain Millers

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How are the feed shortages from a late harvest impacting organic grain farmers?

Due to the relatively small organic feed market, we really haven’t experienced any impact due to the late harvest. There was actually quite a large carryover of organic feed barley, and that seems to have kept the prices very stable. Once harvest is complete, a large amount of the later harvested organic cereal grains will most likely not make the milling grade, and that will work to keep feed grain prices down.

How is the trade war between China and the US impacting Canadian organic grains?

We really have not experienced any kind of impact from the trade war between China and the US, as far as organic grain pricing goes. The majority of the impact appears to be in the soybean and canola markets, so minimal in the organic industry. We could see some impact on the small amount of organic soybeans grown up here in Canada, but it would be minimal.

What role does the Canadian dollar have in organic grain exports and prices?

Currency exchange is always a factor in the import/export of anything, but is especially important in the grain industry. Canada exports the majority of our organic grains and grain products to the US, and that will continue as long as the US dollar remains strong. If there were to be a turnaround in the dollar values, we could see the US looking at more overseas imports, and most likely a drop in organic grain prices.

Field Farms Marketing

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How are the feed shortages from a late harvest impacting organic grain farmers?

This harvest season has shown a solid and good quality grain and oilseed crop. The high quality of these crops has resulted in a larger than average portion going into the food market rather than the feed market. This could perhaps lead to a temporary shortage in feed grade grains and oilseeds as farmers understandably choose to sell them into the food market. Should farmers notice a glut in the food grade market within Canada, some may choose to store their products waiting for the right price or look abroad to market their high quality product. However, this does not appear to have any significant or negative impact on organic grain farmers.

How is the trade war between China and the US impacting Canadian organic grains?

The heated trade rhetoric and action between China and the US have pushed businesses in both countries towards different markets. Due to the tumultuous and unpredictable nature of the trade war, Chinese purchases of Canadian organic grains have slowed to match the confusion caused by the rocky trade situation. Further, Chinese manufacturers cannot guarantee that their US customers will be able to purchase Chinese origin goods in the long term forecast.

To add to this shift in demand, ocean freight expenses have increased across the board. One key reason for this is the impending tariffs on Chinese goods due to take effect on January 1st. The already busy pre-holiday freight season is being accelerated by the rush to ship goods before the tariffs are implemented.

What role does the Canadian dollar have in organic grain exports and prices?

A weaker dollar increases interest from US buyers in purchasing Canadian grains due to the higher buying power of the US dollar. Regarding prices, as the demand for Canadian organic grains increases, prices will rise to accommodate the demand in US markets. However, a weaker Canadian dollar can increase the cost of farming inputs and farming equipment.

Should the Canadian dollar make substantial gains against the US dollar, a limited demand for Canadian grain could follow in favour of cheaper grains from other countries.

While the Canadian dollar performance against the US dollar is the most important, we should be keen to note that Canadian-US dollar performance is not the only measure of how Canadian grains will measure in the global market.

October Market Commentaries

Grain Millers

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What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

As far as the NAFTA negotiations, or lack thereof, go, we initially were concerned about potential restrictions on shipping, and what it could do to sales into the US. However, we really have not seen any sort of delays on shipping, or orders coming to us from across the border. If anything, sales may have even increased some, which is always a good thing.

What impact is the Fall weather having on the grain quality and volume this year?

Up until now, the quality and yields of the earlier harvested crops have been way better than expected! With the dry conditions this year, we were expecting lower yields and light test weights, but so far, yields have been surprisingly good, and the weights have been above our spec for the most part. Some of the later harvested crop could have some quality issues due to mildew and sprouting, but fortunately the weather has remained cool, and that will help curb some of that quality loss.

With other regions having completed harvest, what impact does that having on the pricing for prairie regions that have not harvested yet?

We really haven’t seen any pricing change through harvest, and that is usually the case. There are always areas that get done ahead of the rest, and whether or not their crop is good, most buyers sit on the sidelines during harvest and don’t get too aggressive until the whole crop is in the bin.

W.A. Grain and Pulse Solutions

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What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

We have not felt much impact on the NAFTA negotiations.  There were some concessions on wheat grading, but the effects should be minor.  However, the trade war between US and China is looking to be a lot more complicated than expected.  Both sides do not seem to be letting up and this is causing slight hesitations in the market place.  We are watching closely to see what level of tariffs will be placed on Chinese products entering back into the US.

What impact is the Fall weather having on the grain quality and volume this year?

The fall weather has been wreaking havoc on a lot of the farmers in the prairies.  The rain, snow, and frost has caused some producers to sit on the sidelines for over 3 weeks. This has caused a lot crops to be completely wiped out or downgraded to feed quality.  There are lots of delays in combining and getting product into the bin.

With other regions having completed harvest, what impact does that have on the pricing for prairie regions that have not harvested yet?

Due to the these weather conditions, there will be some shortages in the market as Alberta and Saskatchewan were hit hard.  Currently we have seen very little price spikes but that might change in the future.  Larger crops being harvested in the US could offset any potential rise in prices for Canadian producers.

Farmer Direct Organic Foods

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What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

The continuing NAFTA negotiations and the failure to reach a deal has tempered the Canadian dollar in the midst of increasing oil prices.

The Canadian dollar traditionally rises as the price of oil rises making our organic exports to the US more expensive.  Because of NAFTA uncertainty there has been no downward pressure on farm-gate prices due to an appreciating (relative to the USD) Canadian dollar. Exports have not been affected although some buyers are preferring USA domestic organic production because of the uncertainty of a trade war and how this will affect US/Canada trade in agricultural products. As stated above NAFTA uncertainty has ironically kept prices stable.

What impact is the Fall weather having on the grain quality and volume this year?

It’s difficult to determine this, until the harvest is either off or deemed to damaged for food markets. Many of the pulse crops have been harvested but the cereals and oilseeds could be negatively affected.

With other regions having completed harvest, what impact does that have on the pricing for prairie regions that have not harvested yet?

Apparently the great plains had a decent harvest, so this will affect wheat prices most significantly. Despite difficulties with harvest weather, buyers aren’t jumping to lock in good quality harvested wheat at decent prices…at least not yet.

Hemp Production Services

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What impact are NAFTA negotiations having on organic grain marketing, exporting, and/or pricing?

The NAFTA negotiations and now renamed USMCA agreement has no effect on marketing hemp between Canada and the US.  At this point, the growing of hemp in the US remains illegal federally. The exception is for those states that are participating in the research pilot program which currently includes about 30 states. More important in the future will be the 2018 US Farm Bill which, if passed, includes the Hemp Farming Act. Under this Act, hemp will no longer be a controlled substance and the sale of CBD will be legalized in all 50 states.

Hemp Production Services is working with some Canadian organic hemp growers to extract CBD. It is expected the new Farm Bill will both improve market demand and access of CBD, but also open up the organic production of hemp and CBD extraction in the US. How this will affect the overall market is not clear at this time.

What impact is the Fall weather having on the grain quality and volume this year?

The cool and wet fall has created a number of challenges in the hemp harvest across the prairies. Although some growers were able to get their harvest off before the weather turned, other growers are struggling to get the crop in, dealing with snow and wet conditions. Grain quality has not been affected yet as the temperatures have been low enough to prevent sprouting. If temperatures would rise with continued wet conditions, hemp seeds would begin to sprout in the head.

With the freezing temperatures, the hemp plant has matured quickly making the seed more susceptible to shelling. If wind speeds pick up, severe shelling could occur if growers are not able to bring in their crop quickly. Hopefully the last of the crop can be brought in by mid October if conditions improve.

August Market Commentaries

Grain Millers

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Who are the major competitors for Prairie Organic Grain products at the moment? Why do buyers purchase from them?

We mainly see competition for our Prairie Organic Grain products coming from overseas into the North American feed market, primarily from eastern Europe. Buyers generally are purchasing from them because of the low prices and large volumes that are available. However, recent incidents of potential organic fraud coming from certain overseas nations has our domestic feed market reconsidering many of their options.

What, if anything, do we need to do to get our products into some of those markets?

For us, growing the organic acreage in Canada is our best method of trying to help ensure that domestic markets do not need to look overseas for supply, but it definitely will take time to get to that level.

W.A. Grain and Pulse Solutions

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Who are the major competitors for Prairie Organic Grain products at the moment? Why do buyers purchase from them?

We have many major competitors for each commodity. Each geographic region posses some sort of challenge and threat. There are times logistical costs are one major barrier to entry from one province to another, excluding any geo politics or lower cost producing countries. Buyers mainly purchase from other countries because of pricing, quality and trust. Certain commodities from other countries are not seen as risk for violating organic standards, while some countries are not even considered regardless of how economical it is.

What, if anything, do we need to do to get our products into some of those markets?

We need to improve our infrastructure to increase our competitiveness. We need to have a functioning rail system that works for everyone and to get the rail cars moving.

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.

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.