bins

Spring Market Update

Posted on March 30, 2014 · Posted in News

Spring is here, and now it is time for everyone’s favourite game: guess how big the pothole is under that puddle!

Another brutal winter is behind us. Along with the renewal and optimism that spring holds, we are also looking for the rail system to step up and start delivering cars. The issues surrounding the movement of grain have been well documented. I feel that while the issue is very complicated, but the bottom line is that significantly less grain has moved than anyone has expected–even when we were preparing for below-average service. This has been a disaster for handling facilities who’s only source of revenue comes from shipping grain. Equally significant is that we have worked hard with producers to deliver competitive prices and delivery options—they are relying on our business to facilitate the movement of their grain. I would like to thank every producer we have worked with—you have been very patient and understanding through this winter, and I appreciate your willingness to work with us as we solve the freight issue.

The silver lining surrounding Canada’s inability to deliver lentils in volume is that we inadvertently created supply-demand tension in the market. This allowed markets to remain firm through typical periods of over-supply.

Red lentils have enjoyed a springtime rally, which seems to be an emerging annual pattern. Weather problems in some destination markets have fuelled optimism and prices have responded accordingly. I am feeling that growers will increase red lentil acres this year—and I would anticipate a corresponding large production. It is important to note that there will be very low carryover, but given a large potential supply in the fall, it is likely that prices off the combine should drop especially for the fall delivery period. There are good contracts available and I would encourage growers to participate at locking in decent prices to satisfy their fall movement/cash flow demands. We are actively looking to book more production contracts for new crop red lentils, and are offering competitive bids. Give our office a call to book now, which will be purchased for fall delivery.

Green lentils have not benefitted from the same market scenario. Remember that for the most part, green lentils prices are almost entirely affected by the volume and quality of Canadian production each year. Production last year was excellent, with good quality—markets are well supplied and are at the moment satisfied with what is available. While hoppercar shipments have undoubtedly been the most affected by the logistics problems this winter, container and boxcar availability has also hampered container and bagged shippers from shipping larger than usual volumes. I would expect large green lentil prices to remain sideways. We will end the year with modest carryover, and next year’s prices will largely depend on the seeded acres (I feel will remain average) and the quality/yield. We would need to experience a production problem for prices to raise significantly. Agrocorp has significantly simplified the marketing of large green lentils—we offer clear prices for grade #2 large green lentils, without creating several sub-grades, each with its own price and invented parameters. This has allowed us to buy straight #2 green lentils at fair prices without the confusion and uncertainty that can happen otherwise. Also of note, the small green lentil markets are very well supplied, and have seen the most difficult marketing year in recent memory. Lackluster prices and delivery options are likely to continue into the new crop year.

Green Peas have also regained their place as dependably paying a decent premium over their yellow counterparts. While prices have eased from the highs of last winter/spring, they have also remained stable and competitive. Expect demand to remain constant through into new crop, with new crop prices looking to be in the $8.00-$8.50 range, depending on delivery area. Between now and new crop, watch for bids to come in line with new crop prices. We have produced several years of top quality peas, and the main risk issue for growers is the understanding that some year’s weather produces higher bleach peas, always priced at a discount to #2 bids. Agrocorp has a strong presence in the destination markets, and is able to move all qualities of green peas at competitive prices.

On a personal note, my last day with Agrocorp will be March 31. Working with Agrocorp has been a complete pleasure, I am very pleased and honoured to have been a part of the development of the Moose Jaw processing facility. I would like to thank our phenomenal staff for going above and beyond on a regular basis. Agrocorp will continue it’s phenomenal growth in Canada—backed by experienced and principled ownership, a commitment to excellence, and a vision for the future of grain marketing that is relevant to the current grower’s needs. I leave with complete appreciation and respect for everything Agrocorp has given to me over the time I have been here and look forward to working closely with Agrocorp in the future. I am reminded of the saying, “Every accomplishment begins with the decision to try.” This beautifully describes my relationship with Agrocorp. They have made the decision to try. The results have been truly amazing. We have succeeded in many fronts: a new concept in high-volume pulse handling; bringing the destination markets to growers; raising the standards for prompt payment and clear pricing; to allow ethics, honesty, and trust drive a business; to opt for innovation over status quo.

Colin Young
Manager

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

Phone (306)693-8887
Fax (306)693-8880
cyoung@agrocorp.ca