SPRING MARKET

Welcome to our new website www.commodious.ca;  The following comments can be found under the “weekly market analysis” button on the main screen.

Markets have been challenging for nearly 2 years largely due to global financial challenges in almost every country in the world.  Producer prices have slowly declined over this period.  Most of them reaching bottoms in late 2012.  I am confident to say that we have found firm resistance for most markets since January 2013 and it is very unlikely to breach those levels within the next 12 months.    The challenge is going to be predict the full upside of the markets.

There is no doubt the future market will largely be determined by the weather and the concentration of remaining stocks in the hands of strong producers.   While the downside is secure, demand has not been consistent for many years.   We are all faced with the challenge of deciding to sell into demand when there is demand and hopefully not miss an opportunity for continued price improvement like we have seen in red lentils and green peas this year after a long period of lacklustre demand and fading prices.

Green Peas – With current crop sold out, focus is clearly on 2013 crop.  Expectation is to see a large acres in USA and CANADA in 2013.   Available seed will be a limit the ability of producers to plant all they want.  It is difficult for me to see how Canadian producers could oversupply the market given the current conditions.   Demand at harvest time will undoubtably be strong.   Weather and potential quality concerns will remain firmly in play until early 2014 and leave a lot of opportunity to have a volatile market.   Hopefully prices will settle around $12/bu at the grower level and provide for some  market stability and lower the risk of participating in future sales.

Yellow Peas – Prices have remained firm for most of the season slightly higher that current supply suggests they should be.   Even at these levels, WYP continue to disappear throughout the prairies.   It has been suggested that yellow pea inventories will also largely be gone by October and prices will remain at least at current levels through 2014.

Red Lentils – WRL have experienced and excellent surge in value since mid-february.  Just when it felt like the grower market would remain below 18 cents forever, demand from India has swept the market up $150/mt in less than 8 weeks bringing the grower bid up 40% during that time.   This has left the rest of the world markets scratching their heads in disbelief as New Crop bids to the Canadian farmer remain strong through November.   We will have to wait and see if other producing countries upset our strong run in value when they begin selling their harvest in the coming months.

Green Lentils – LGL are another item caught up in the Indian tide of the past few months.  ISC market has done a huge favour to Canadian growers by cleaning up a large surplus of 2011 lairds sitting in the bins.   While I do not see the Indian market to continue to run prices higher, they have removed all the “low-lying” fruit from the market.   New purchases need to come from producers with much less need to sell.    Combined with the stellar rise in red lentil prices, it will be unlikely that green lentils will see any price depreciation in the Canadian market for the next 12 months.   It also means a more green lentils will get seeded than were being discussed at the crop show in January.   Steady demand combined with weather and seeding concerns leaves room for prices to continue to advance moderately through 2013 and into 2014.

Canary – Canary is what canary does.  It finds a level and generally sticks to it until there is a fundamental shift in supply.   At the moment supply is adequate and grower levels have been firm at 27-28 cents.   Short of a disaster, it is unlikely we will see Canary seed prices improve very much.   However, all attempts to bring the market down a couple of cents over the past 12 months have failed after a few weeks of low bids from exporters with limited results.  Expect more of the same.

Have a great week.