MJ Winter

Spring 2013 Market Report

Posted on April 19, 2013 · Posted in News

As we emerge from a completely brutal and relentless winter, markets for pulse crops have finally come to life and we are seeing strong demand, arguably for the first time in 18 months. With massive snow storms, excessive moisture, and extremely slow thaws, there are concerns over the very real impact these factors will have on spring planting. While seeding will most certainly be delayed, we have not experienced a complete apocalypse. My father would often tell me, “we have never made or lost a crop in April”.

Late winter and early “spring” weather have brought many logistic challenges which continue to effect movement of cargo at the ports. Rail shipments were delayed, and even though the Easter season was prime for loading, the rail could not deliver ergo vessels sat in the port idle. With summer approaching, expect the supply chain to re-adjust, clear the backlog, and correct the sag in shipments from the winter months.

Green peas have unquestionably been the best performing crop this past year. A surprising development is that even with new crop prices well above average levels, the seeding acreage will not significantly increase due to a lack of available seed. Expect prices to remain strong into and through the 2013 crop year. At current levels, new crop contracts are also something that would be highly recommended—Agrocorp has strong demand for new crop contracts. We have been very active signing new crop contracts, and I would advise growers lock in a portion of their upcoming green peas at excellent prices.

Yellow peas have remained strong all marketing year and have not been subject to massive price swings like the other pulse crops. New crop price levels are very attractive, seed is plentiful, and the short growing season will all continue to be factors which keep yellow pea acres strong. The general feeling with yellow peas is that this market will sustain and remain stable.

After a very lackluster winter, red lentils have seen a flurry of activity that saw prices rise over $150/MT in less than 6 weeks! The bulk of this demand has pulled from the Indian sub-continent, but growers rewarded the rising market with steady participation as returns became acceptable. Some feedback has been concern that the market has risen so sharply, these new levels may not be sustainable. I feel that new crop prices are very attractive and strongly advise participation. We have very competitive new crop prices, contracts with options for Act of God, freight incentives, or straight delivery contracts, depending on which option suits your marketing strategy the best.

Green lentils have also woken from their long slumber and we are seeing good demand for all classes and grades. The green lentil market has become very confusing, as most vendors have fractured the #2 grade into several sub-grades. Growers are left with uncertainty as to what they are selling—and uncertainty as to how their product will be graded. I would advise making sure that any of these “add-ons” to regular #2 grade standards be clearly understood and defined on the contract. Agrocorp has purchased good volumes of #2 large green lentils as just that–#2. I greatly prefer the clarity of purchasing and selling within existing grade standards without further complicating the grade structure.

In general, I believe that speculating on markets can be classified as tomfoolery. Markets by nature are unpredictable. I think it is very safe to say that each person gathers all information possible to distill a bullish or bearish opinion on the market. Growers have a very difficult job when marketing their production—watching rallies and declines, and trying to cypher the most optimal time to hold or participate. I would say that the spring rally has been largely fuelled by demand from the Indian sub-continent, and that for the most part the middle east has been quiet as they continue to struggle with political stability and financial liquidity. We have lived through an extended down cycle—and know all too well the prospect of selling at or near the cost of production. Now that we have seen recovery in the markets, I strongly feel that new crop participation would be very wise. If markets retract in the fall (remember that there are several significant global harvests in August/September/October/November), having a portion of the crop sold at solid price levels will allow for cash flow and inventory movement before winter hits.

As our Moose Jaw facility nears completion, we are very excited about the upcoming growing season!