December Market Report

Posted on December 18, 2013 · Posted in News

Agrocorp Processing December Market Update

A story has been told of two drunks walking uphill between railway tracks. The first one complains, “This is the longest stairway I have ever been on.” The second replies, “It’s not the stairs that bother me, it’s the low bannister.”

We at Agrocorp Processing are also experiencing difficulties navigating the railway tracks. The challenge of moving a record crop has met with an inland logistics nightmare. It is not productive to take a complex issue like logistics and cast blame on any single party, but it is fair to say that the grain industry has not seen any resolve from the railways to increase service. There is not any single party that has been exempted from the shortfall of available freight—from the large inland terminals, to medium commercial facilities, to single car shippers—we are all suffering. It reminds me of the days when we would grow fantastic Durum wheat crops, contract them with the board, and then watch as we could only deliver 50% of our A series throughout the year. There is nothing more frustrating than growing a huge crop that is profitable, not on price but on volume, and then not being able to deliver more than breakeven tonnage.

With that off my chest, we are having an absolutely fantastic fall at Agrocorp Processing. Our plant is up and running, and has exceeded our expectations in all areas. We have a truly impressive facility; one that I believe is a game-changer in the industry. We are able to receive grain extremely quickly—a super b takes around 10 minutes to dump. This means that we can receive good volumes with virtually no lineups or wait time for producers and commercial haulers. The fully automated facility allows us to clean at high capacity, while still maintaining quality. When building a new facility, I had anxiety over many items, especially that we would be able to handle fragile products like weather-damaged lentils without adding mechanical damage. Shipments from our facility have reached port, been unloaded, and each car exceeds the quality standards. This means that we hit the ground running—and that we can establish ourselves as a quality shipper from the word go. We offer clear contracts, prompt delivery, prompt payment, prices at the top of the market, and staff that is knowledgeable, drawing from experience in purchasing, selling, and cleaning pulses in the Moose Jaw area for many years.

After several consecutive years of wild price swings, lentil markets have remained somewhat stable over the fall shipping period. The issue facing all shippers is the ability to execute deliveries within contract terms—both in taking delivery from growers, and in being able to ship within the buyer’s contract terms. This has meant that a lot of business has been passed over due to the risk of logistical problems overriding the ability to meet demand. I would expect the remaining crop year to be marked by cautious purchasing/selling as we all are struggling to anticipate what we will be able to get moving from our facilities to port. While these issues are significant to the industry, Agrocorp has been working hard to keep grain moving through this time. We have excellent demand for both large green and red lentils. Call our Moose Jaw office for pricing and delivery options—I would strongly advise selling some lentils for winter delivery sooner than later as our capacity for Jan/Feb/Mar is filling quickly. Lentil markets look like they will move through the end of 2013 and into the first few months of 2014 at levels similar to current bids, and I would suggest that movement will continue to be more of an issue than price.

Chickpea markets remain completely quiet as cheap stocks still are flooding destination markets. Expect them to remain quiet for the remainder of the winter.

Green peas have maintained good values over the winter, and I would expect to see similar prices for the next while. I do feel that the market remained strong due to the fact that there was not enough seed retained last year to significantly increase the acreage. This year growers have held back ample amounts for seed, and I am anticipating higher acres with corresponding lower price outlook for next year’s crop. While markets are impossible to predict, it would be wise for growers to make sure they are growing varieties that will produce top-quality product. When supply is tight, markets are more forgiving on quality due to the limited availability of alternative stocks. As we move into a more well-supplied market, the varieties that produce smaller (and inconsistent) sized peas, along with excessive dimpling/defective seeds are less desirable and would not receive competitive pricing if supplies are ample. As a general comment (I grew up on a pedigreed seed farm), it is good practice to find seed as close to certified as possible—some of the seed will show recessive genetic traits as it is seeded generation after generation. Striker and Sage remain the varieties of choice for smooth green peas. Remember that the cost to switch into newer seed isn’t as terrible as it seems—the difference is the cost between market value of what you would retain for seed, and the seed price for newer seed (which usually includes cleaning cost), so in most cases it is only a few dollars per bushel to gain the advantages of pure, new seed over what could be some fairly tired, multiple-generation seed.

Finally, as the Holiday season is upon us, I would like to thank my incredible staff. All have worked very hard to get this plant up and running, and what we have accomplished is a result of the excellence and dedication that they have all given to the workplace.

As always, I appreciate the business we have been entrusted with by our customers and would like to remind us all to cherish the gifts that matter the most–family, friends, health, prosperity, and freedom. I look forward to the challenges and successes that 2014 will bring!

Agrocorp Processing Ltd.
Box 1118
Moose Jaw, SK
S6H 4P8

Phone (306)693-8887
Fax (306)693-8880